You can't use a TiVo Mini in conjunction with another TiVo unless you have the more expensive 4-tuner TiVo, even though there's no technical reason why that should be.
I agree that there's no technical reason. I think the reason centers around usability.
To watch live TV on a TiVo mini, the mini utilizes a tuner on the host TiVo. I think this is great, BTW -- the mini allows me to have live TV in other rooms without having to pay for a cable card in every room).
But that means that every time someone on a mini watches live TV, it decrements the number of tuners on the host TiVo. So one mini watching live TV turns a 2-tuner TiVo into a 1-tuner TiVo. Two minis watching live TV turns a 2-tuner TiVo into a 0-tuner TiVo. Or, if both tuners on a 2-tuner TiVo are busy recording stuff, none of the minis could watch live TV.
I think that situation would piss off most average consumers, so TiVo decided for usability reasons (not technical reasons) to say that minis can only be used with 4-tuner TiVos.
How is TiVo still vialble since most cable providers provide the basically the same service with HD channels?
For me, (after a large up-front investment) TiVo works out to be a whole lot cheaper, and it's always been way more fun to use.
My cable company charges $60/month for me to rent a six-tuner DVR box (living room) + rent three additional "converter boxes" so the bedrooms can watch the recorded shows.
If I were to go out and buy the biggest six-tuner TiVo Roamio (living room) + three TiVo minis (bedrooms), and pay Lifetime Service for each, I'd be out $1,746 up front.
At the end of five years:
... I would have paid $3,600 to the cable company just for the fees to rent their DVR + convertor boxes.
... I would have paid $1,746 for TiVo DVR hardware + service. Plus I own the equipment, and can resell it. I just sold a TiVo Series 3 on eBay this week for $350. I bought it back in 2007 for ~$650 (including Lifetime Service).
Comparing what it costs to rent the stuff from my cable company, I break even with the high-upfront cost TiVos on month 30. Every month after that is $60/month saved.