It's also worth noting that there is no (public) API support for AirPlay video.<p>At this point I suspect that video over AirPlay isn't mature enough yet for general purpose use so they focused on the two places where it's most useful and required least work. Photo Library uses a custom controller for video playback, and Safari would open up AirPlay to all manner of h.264 streams with a huge variety of encoding variations.<p>The question is whether we'll see better AirPlay support anytime soon. It seems like it would only come with a major update (e.g. not 4.2.2), but Apple have never delivered a x.3 release of iOS and we're starting to get into the window where they need things to announce for WWDC / iPhone 5.<p>It's also conceivable that any iPad2 release prior to June could actually ship with 4.2. All of its likely hardware features (back/front camera, retina display, gyroscope) are already supported.
Yes, this basically makes the AirVideo feature worthless to me. The AppleTV already plays YouTube and stuff from my iTunes library natively. Why would I want to stick the iPad in the middle?