And what Rishi Chandra say is exactly what the OP said. Chandra didnt put all the FUD you wrote, Chandra said that the Chromecast takes the content from the cloud like the OP said.
Chandra was asked two direct questions by The Verge about monitoring videos and using it as an ad platform. Chandra rebuffed both. My only point is that Google's track record is to say one thing and do another. Hardly FUD -- I'm just not being naive. Google is a corporation that is intent on making money. Why sell the Chromecast at or below cost if it will not be used to make them money? There is only one answer: in order to gain a foothold so it can be used in the future to make money. That is not FUD -- that is reality.
Now, there are parts of what the OP said that are correct. But there are two things that are off.....
1) He said that the Chromecast is opening the stream to YouTube, but from what Chandra said, the Chromecast is connecting to Google's servers and Google is just pushing whatever content it needs down the pipe. The Chromecast does not connect anywhere but Google (except for the WiFi-only feature for mirroring Web pages where it replicates the actions you do on the smartphone browser on the screen). Its a slight difference, but one makes the device independent of Google and able to go anywhere on the Web, and the other requires Google to be the middle man and broker the content that gets sent.
2) He begins with this part (my emphasis):
From my understanding of what Chromecast is doing, is effectively running an invisible version of an OS on the stick. either Chrome or Android. That way ,while it can just display the output of your screen to the large screen, it can in fact take over the processing intensive tasks from your device for displaying on the big screen.
That part really threw me because the Chromecast is hardly taking over processing of "intensive tasks". It's not designed to be a server to offload things to, but rather just a receiver for whatever content Google pushes to it. The real processing of "intensive tasks" is actually happening on Google's servers.
That said, I think you are correct too. Re-reading his whole comment he is basically saying that it is not streaming directly from the device but getting the content from Google. However, I read it differently with all the embellishment in there. Ultimately, the Chromecast is a Google receiver for a streaming channel that is personalized to you and controlled via your smartphone, tablet or PC.
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That is your counter. Top 3 results are paid ads and have a yellow background on them. They do not count against the first page results. On page 1 Google will have the same time number of people non ad results. They still are not going against what page said. I know first thing I do when I get a search is jump to just below the ads and start there.
That is your counter to my counter?

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God forbid I search for "pizza" and get Domino's and Pizza Hut as the first hits.
Oh, and a local pizza restaurant. Google does suck pretty bad with those advertisements.
What you see there is still 100% counter to Google founding philosophy. That's my point. What Google says today holds little credence 5 years down the road. If Google says they are not monitoring the content you watch on Chromecast for targeting ads today it does not mean that they will not be doing that in 5 years. If Google says Chromecast is not intended as an "ad platform" today does not mean that it won't be in 5 years. Google's strategy is to get a foothold and then leverage that foothold to their advantage.
I don't think its bad that Google is trying to make money, but I think they should be a bit more up-front about it. Instead they try to portray themselves as this benevolent entity that likes to give things away for free for the good of humanity. When in fact they are money grubbing power-hungry corporation just like Microsoft and Apple and Samsung.
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Don't be dense. What's so bad about what he's showing? Other than the fact they're advertisements, they're likely giving him exactly what he's looking for.
I never said it was a bad thing, but it was exactly what Google criticized the competition for. Google's way is what gained them ubiquity. Now they are slowing changing their ways that people no longer go to "search" something but instead go to "google" it instead. The bad thing is the hypocrisy and the less-than-up-front nature of Google.
I simply don't trust that what Google says today with regards to putting the user's best interests first will hold when Google has a virtual monopoly on something. Chromecast has to make money at some point or else it has no point for a corporation like Google.