Oh, I did. I saw how the "bug" theory (just a theory) was thrown up here. I read how contradictory your explanations were.
Once again, it appears that you don't read very carefully. The "bug" theory has long since been laid to rest. The initial AirPlay documentation posted on Apple's web site indicated that AirPlay could be used to stream audio from an iOS device to an ATV1, but that document has since been revised to say that you can stream only from iTunes on a computer to an ATV1.
http://support.apple.com/kb/HT4437
It is also clearly stated on Apple's web site that AirPlay is a component of iOS that allows those devices to stream directly to an ATV2 or AirPort Express. The ability to use a mobile iOS device as a streaming source did not exist prior to the advent of AirPlay in iOS 4.2, and that has nothing to do with AirTunes.
http://www.apple.com/ios
iOS 4.2 and AirPlay came along long after the last ATV1 software update. It would take a software upgrade to incorporate AirPlay compatibility into the ATV1, and, as I have said many times before, I just don't see that happening for a device that has been obsoleted by a newer model.