Neither the right click menu item "delete", nor the key command suggestions work for me for items I have purchased at the iTunes store.
I have videos I have watched and want to delete them, and there seems to be no way to do it.
You can't even have iTunes point you to the file on your hard drive.
These are taking up many gigabytes and I can't get rid of them... If I delete the files in the finder, the next time I sync iTunes, they start downloading again!
Geeesh!