Just one point. Terminal velocity. the problem isn't so much the fact that it burns up in the atmosphere (I'm pretty comfortable with the idea of a falling cattle prod, actually), but the fact that this friction with the atmosphere will limit its maximum speed. No matter how much initial input you give it, much of this energy wil be lost to friction. The only reason you would want to make it come out of the barrel so fast is to ensure that it hits the target ASAP, and thus simplify your calculations and increase the reliability of your lead target indicator.
And one question: are you people considering a geostationary railgun or an orbital one? It's kinda tricky eitehr way because any changes in velocity would affect the rifle's angular velocity and orbital height. Remember that in orbit v2 = GM/r (simplified equation). Change v and lots of other stuff changes.
Personally I find the idea of a lunar railgun more feasible. Realistically speaking, it's mainly because I don't like the idea that tons of space junk is out there floating at the same orbital height as my gun. Response time is also a factor, of course. Though the large orbital height will complicate calculations, also remember that the large mass of the moon will help to counteract the recoil momentum of the projectile, thus giving it a higher initial velocity. That will help alot.