It just sounds to me like an overhead to use web services.
I would certainly agree. To use web services for an intranet application as you have described is complete overkill, in my opinion. You will add cost and complexity to the appplication for no benefit - indeed, it will run slower than every other solution I can think of.
Remember, web services can be a good solution for inter-system communications. In my company, we are use web services for interfacing applications written inhouse, partly to decouple them from each other.
But I've seen applications where web services was used internally, and I could see no benefit at all. For these applications, what's wrong with passing objects around? And if the client is remote, then RMI or EJB (which uses RMI-IIOP) would often be best.