There's lots of confusion about Airplay out there
So several people have chimed in to my original question regarding the usefulness of iPhones and iPads acting as a client for AirPlay.
One of the common use-cases brought up on this thread (including by Arnold Kim elsewhere, I think), is the case where you're watching content on your Apple TV, pause it, then walk away and resume on your iPad, with the iPad acting as an AirPlay client.
But I don't think this is as useful as some of you guys may think. The point of "switching" over to your iPad or iPhone is that you're probably about to leave the house and go mobile. Until Apple comes out with something like "Airplay over the Internet", this dream scenario can't happen, because the video is beaming to your iPad via your home wifi which cuts out when you leave the door.
The way I see it, there are several ways Airplay can work:
1-Airplay over LAN via Wifi - this is the current implementation. Currently is limited to iTunes 10 and iOS mobile devices (running 4.2) acting as servers for content, and the Apple TV acting as client.
2-Airplay over the internet, received via Wifi
3-Airplay over the internet, received via 3G
4-"Airplay" from a remote cloud server to a client registered with an iTunes account
Scenario 1 is the current implementation, and scenarios 2, 3, and 4 are what I think people actually want in their dream setup. Scenario 3 is dependent on the mobile carrier allowing users to stream bandwidth intensive video on their network, and both scenarios 2 and 3 are actually not very ideal. Apple knows that the upload bandwidth from households in the U.S. is excruciatingly slow, and streaming a movie from home to your iPad probably doesn't meet Apple's high standards for experiencing video playback. They're happy leaving it up to third-party apps like Air Video and Zumocast to do that sort of thing.
So finally, scenario 4: this I believe is Apple's ideal solution, and I think it's why they're building the North Carolina data center. This is essentially an iTunes "in the cloud", and it gets around the problem of crappy upload bandwidth in the average household. But it introduces a new problem: yeah it's great that I can rent a movie from Apple and stream it from the cloud, but what about the 160 GB of movies I already have on my home computer's iTunes? That would take forever to manually upload to Apple's servers.
I think Apple will get around that by scanning your library in a way similar to Lala did, and instead of uploading a local purchased movie from the home computer to the server, Apple will just "check a box" on their server and now let you stream it. Same deal with music. And as for your home camcorder videos that obviously don't exist in Apple's iTunes content database? That's what MobileMe is for, or at least that's the response Apple will give. So you'll have to bite the bullet and upload your home videos manually, just like we've always been doing.
What will be interesting is how Apple will handle commercial films that people have ripped from their DVD's that are in their iTunes library. Apple could recognize that as a legit "purchase", and check the magical checkbox that enables cloud streaming for that movie. But I'd bet against that, because that kind of feature would step all over Hollywood's balls.
