Many people have cable modems or DSL with stupid-fast bandwidth. I don't think it would take that long to send a program to another user. I do agree that it's only useful for people with fat pipes, though.
You are right about data compression. But it's no big deal to many people watching on small-screen televisions who simply want to see the latest Buffy episode they missed.
For those who dislike looking at data compression artifacts, then this product isn't for them. I'm one of those people. I even dumped my little-dish DirecTV unit when the data compression got too irritating. Now I'm on big-dish C-band satellite with high-def capability and no data compression and I'm happy. But I can't use a Tivo or Replay with that system.