Does iTunes have to store a local copy of all Apple store purchases?

My MBP has a 1-TB hard drive, and I have barely 40GB of space left on it. Problem is my iTunes media weighs in at well over 700 GB. The vast majority of that is movies (about 380GB) and every episode of a TV series that ran for seven seasons (250GB) that I bought through the iTunes Store.

My Apple TV is able to play all the movies and TV shows by streaming directly from Apple rather than homesharing across my network. It works great and I very rarely have network latency/performance problems.

So here's the question.... Can I do the same thing with iTunes? Or, does iTunes absolutely have to store a local copy of all purchased content on my hard drive? I'd much, much prefer to stream the movies and TV shows through iTunes when I play them on the road. I couldn't care less about the music, books, and miscellaneous other content -- they all top off at a very manageable 50GB or so. But if I don't HAVE to have the movies and TV shows stored locally, it'd allow me to free up a massive amount of disk space.

To clarify: I still, ideally, would like to be able to see all my movies and TV shows in iTunes from my MBP. But if I want to play any of it from there, I'd prefer it stream it on demand rather than play locally from the hard drive.

Dan