....I'd like I tunes to just stream to Apple TV.
A secondary library will stream only, to set up a secondary library you will need to unpair your primary library first (select 'settings/computers/
your library') and then select 'settings/computers/connect to shared library'
However before you do that you can stream everything but photos from a primary library and there are significant advantages to having a primary library. Your primary library will stream everything that isn't synced and you can actually tell it to sync nothing, in which case everything will be streamed.
If your tv is only showing that which you have synced then you most likely have the 'Show only synced items...' box checked under the summary tab.
(Please excuse my unsupported nomenclature)
....How do I delete stuff from the Apple TV hard drive?
Everything will be deleted if you unpair your primary library, however if you intend to keep your primary library, simply deselect the items you no longer want synced and the next time you sync they will be deleted from the tv.