Wow. I think that was real. But if it is, I have two problems with it...
1. Is this going to be it's own separate app? Or is it part of the iTunes Mobile Music Store? It doesn't look like it's part of the music store.
2. Who is really going to download a TV show or movie on their phone? I have know doubt that if this feature is in the 3.0 software you will only be able to download over WiFi. And it'd take hours to download a movie. If this streams the video to your phone over WiFi and the cellular network, then I'd be fine. But if not, this feature is kind of useless.
Well I use the movies on my iPhone for one - WHen i'm at my old PC, which can't show it without stuttering, I can simply transfer to the iphone and watch wherever I want.
Bear in mind that this could very well link to the possibility that with a new dock, iPhone could much more easily video out to a HDTV. So apart from iPhone gaming on the big screen, you could stream your video to a TV.
So you could use your phone as a way to transport the film to a friends house. Bring the phone, dock, cable, then watch when you want.
Over 802.11n and a decent wifi it wouldn't take hours to download a movie. Plus if you can be downloading whilst streaming the movie that would cut time down too.