Yes. It's not an artificial "limitation." It is a true limitation. Older boxes don't have the capabilities to encode to modern codecs. The iphone doesn't have the capability of decoding old codecs. It's pretty simple. They are not trying to screw anyone. In fact they are offering discounted upgrades if I remember right.
From Slingcommunity moderator:
" The Pro and Solo are NOT capable of H.264 streaming. That very point should put an end to codec speculations. Period."
I am not sure if this it true but I think that the Slingbox Pro came out before the Slingbox tuner and the Slingbox AV. The Solo is newer hardware as is the new HD model. If it works on the Pro is should work on the other models except maybe the Slingbox Classic.