Anyone who doesn't think Apple is going to offer this as on-demand radio streaming is downright stupid.
In case you didn't notice already, a basic radio service is already readily available through iTunes. Now, I know that iRadio is targeted at mobile devices, but you have to think for a moment. If all Apple was going to do is copy the existing radio service from iTunes and whack it into iDevices, they wouldn't go to so much effort to negotiate these deep content deals and brand it as iRadio.
A sensible conclusion as to what Apple will most likely do with iRadio is this:
Either a free or low-cost subscription-based, on-demand radio streaming service based on the content of the iTunes store. Every song will have a "buy now" button beside it when played to encourage sales. In addition to on-demand, there will be a large number of "channels", including a system for user-created radio streams, possibly with a small subscription cost to the creator of the stream to set it up. Free listening, of course.
The system will profit from the "buy now" sales and from short radio ads that run possibly every 5-10-15-20 songs. Possibly with some way of disabling ads at a cost.
Keep in mind, this is just logical speculation. I'm not claiming to have inside information.
That, with I'm sure a range of other features that we currently don't know, would make for a great radio service.
Don't be so quick to judge it. It isn't even finalised, let alone released.