i don't know exactly how this is working or what all this branches into but the implications of what has been reported sounds quite serious. You seem to be minimizing it because it is only for streaming videos. But how do you know? This customer sounds like he is not overly vested in the Apple platform. What about people that have more then just an Apple TV?Time and time again, none of this would be a problem if people kept proper offline backups of all their purchased content. You paid good money for the file, why be stingy about a few gigs of hard drive space for it?
Also, this situation here is exactly why "the cloud" is not the be-all end-all solution to all out technology problems. Even for leisure activity such as watching movies, I don't want to cede control of my files to the whims of someone else. A few large external hard drives or a proper NAS are cheap cheap cheap compared to all the headache they prevent.
More to the point what about people buying iOS apps and OS X Programs? Will a download on iTunes for some dinky 99 cent song knock out something like Final Cut or Logic? This sounds like a very serious problem.