Well an AVT1 is basically a modified version OS X running an actuall iTunes library, and another computer actually runs itunes. In those cases, they are all authorized and can play w/o talking to apple.
The AVT2 is pretty much PURE streaming. It only has 8GB of storage to buffer something while you watch it. I think because it's not actually storing it, Apple is taking some extra step to make SURE the content is authorized...
TBH it's sort of silly.. my iphone and ipad2 can stream from iTunes with no internet connection present... and an ATV2 is just a modified version of iOS. So I really don't understand the extra level of caution Apple is placing on the ATV2. TBH, it's REALLY annoying.
The ammount is bugs the ATV2 has is really starting to get annoying
1) iTunes Libraries vanish, and don't come back until either a) the ATV2 is rebooted, or b) you have to restart the iTunes computer or the Bonjour service. This happens to me about 1-2Xs a DAY
2) ATV2s love to corrupt themselves. I have 2, and every few months they boot back up with only ONE menu choice, GENERAL, and they have to be plugged back into iTunes, erased, and re install the OS
3) Apple's Time servers are JUNK or the ATV2 is REALLY bad about setting its time. 50% or more of the time the ATV2 can not set the time properly on boot up (even if you don't have a firewall, and all your router settings are perfect). I've tried shoving an ATV2 in the DMZ, and that doesn't help the time issue.
I have too many purchased Apple contect to switch to another TV streaming service.. so I'm sort of stuck with apple. But I just may either buy a CHEAP mac mini or a very very cheap windows laptop and shove itunes on it... yeah it may cost more... but then all of the ATV2 issues are gone as iTunes to iTunes streaming works very well.