I'm scratching my head too Gary.
This is what I understand.
Firstly
The itunes which is registered to sync with the tv, now has photos in the itunes library menu on the tv, however this is the same list as appears in the photo section of the tv source menu. I really can't say whether they do in fact stream or not at this stage, but whether they do or not, there is little point to this feature other than making photos available without switching sources.
Secondly
A photo option now appears in menu's for sources registered to stream with the tv (I'm now talking about sources that are stream only, not stream and sync - hence a second itunes library etc), however when selected it appears that itunes needs setting up to stream photos. Like others here I can't find any option in itunes to set up streaming photos. I'm just wondering if the only opportunity to set up this option is when you are actually registering itunes with the tv.
Has anyone tried this.