Engadget reviewed the AppleTV box today and got some more details on Apple’s new service (better HD quality than Amazon – nice!).  We had thought the previous reviewers forgot to try out Airplay on a 4.2 Beta iOS device.  But it turns out that even the 4.2 betas don’t yet allow AirPlay video to happen.  Audio currently works in iOS 4.2 Beta as we showed you a few weeks ago.

Unfortunately, AirPlay is only available right now for audio, and won’t have its full implementation in place until November. Apple did demo the video pushing feature for us using an iPad, and the system worked flawlessly, save for a tiny lag in between sending the video and it popping up on the Apple TV. There are some lingering questions we have, however. For instance, we were told that while you can multitask on a device you’re pushing content from, you can’t put it to sleep, even if it’s docked or charging. That means the screen will dim, but not shut off entirely, which seems like a weird choice. Hopefully the company will add some kind of charging awareness that allows you to pick some content, dock the device, and sleep the screen.

Airplay is probably the biggest differentiator between AppleTV and the rest of the connected TV boxes out there so it is a disappointment to hear it won’t be available until just before Christmas, though it does explain why Apple isn’t hyping AirPlay as much as we feel it deserves.

BTW, we double-checked Engadget’s facts over AIM to make sure they tried with iOS 4.2 Beta 2 (see below).

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