Updated: 11:26 PM EST: To clarify, the Rage install isn't mandatory. As far as disc-switching goes, Bethesda told us that the 360 version of the game will be shipped on three discs. Discs one and two include the single-player campaign, and disc three is strictly multiplayer and co-op.
Rage is a pretty beastly game from a technical perspective. id Software has been saying that all along, really. John Carmack said it again at QuakeCon last week, only with a small, previously unrevealed fact attached: the game will require roughly 22 GB of free space for an Xbox 360 install.
"On the 360 we don’t have a partial install option; it’s all or nothing, which is kind of unfortunate," he said during the show (via The Sixth Axis). "It means you have to install 21/22GB of stuff which takes a long time but if you’ve got it and you play it on the 360 that’s the way to go."
Of course, what's really important is how the game makes use of that space. L.A. Noire, for example, was spread out across three discs, but you progressed through them chronologically as the game's story unfolded. Rage is a much more wide-open game, which could call for disc-switching that depends more on your location in the world than story progress. Probably not, but you never know.
Source: The Sixth Axis