Of all the features that launched with last week’s iOS update to 4.2, the one I was most eagerly anticipating was AirPlay.

In case you haven’t been following along, AirPlay is the ability to wirelessly stream audio and video from a device like an iPad to your 2nd generation Apple TV. It’s essentially and enhancement on the existing AirTunes feature that already let you stream audio from iTunes to an AirPort Express router so that you could pipe your tunes directly into a connected receiver. AirPlay takes that framework and expands it to include video.

The system is dead-easy. Just make sure that your i-device and your Apple TV are on the same wireless network. Then choose your app: iPod for video or music, the Photos app for, well, photos and the YouTube app for, uh, you get the idea. Once your media is playing or your photo is displayed, simply tap the little rectangle pierced with a upwards-pointing triangle icon and choose “Apple TV” from the list that pops up.

The result is nothing short of spectacular. I tried AirPlay using my iPad as the source device and played back a high-quality version of How To Train Your Dragon. For the techies out there, the file specs are: 1280×544  in .m4v, @155kbps with 5.1 Dolby. In short, it’s a file that has been optimized for Apple TV. Once I had selected Apple TV from the AirPlay list, the movie started playing on my plasma TV within 2 seconds.

I didn’t watch the whole movie but I did let it run for several minutes during which there was no observable glitch in audio or video. Both were perfect. In fact, the video compared so well to the HD version we had rented via Bell TV’s on-demand service, I couldn’t tell the difference.

Sounds great right? Yes – it really does exactly what is promises. But (you knew there had to be one…) I’m extremely disappointed by the lack of AirPlay video support for 3rd party apps.

That’s right. As of right now, the *only* apps that can send video wirelessly via AirPlay to the Apple TV is the Video app on the iPad (iPod app on the iPhone/iPod Touch) and Apple’s own YouTube and Photos apps.

While 3rd party video apps such as the excellent VLC Media Player, CineXPlayer or even YouTube inside of Safari can stream the audio portion of their program to the Apple TV, none can stream video.

Here’s why this stinks: Apple TV is, out-of-the-box, able to stream any content that iTunes can play on your PC. It also has it’s own YouTube app. Lastly, it can present photos from your PC if you enable iTunes to stream that content too.

So what exactly has AirPlay done to extend Apple TV’s capabilities? Nothing. Well, almost nothing.

If you have content on your iPad or iPhone that you don’t have on your Mac/PC, then I suppose it’s handy to be able to stream that content to the Apple TV without the need of a middle-man device. But let’s think about this: If you bought an Apple TV, it’s fair to assume that you were already using your computer as your primary media repository and you were okay with managing that media via iTunes. Now I’m not suggesting that you would *never* use just your i-device to download new content – thereby skipping the iTunes-PC step, but I’m guessing it will be rare.

I real promise that AirPlay held for me, and I suspect many other Apple TV owners, was the ability to use all of the 3rd party apps that have popped up in the App Store that support all of the media file types that iTunes (and thus Apple TV) don’t support.

I was frustrated by Apple’s decision to limit Apple TV to just a few video formats when they announced the product, but I immediately thought “okay, no problem, Apple doesn’t want to support other formats, I can deal with that since it looks like AirPlay will enable other companies to take on that burden through 3rd party app development.” With AirPlay being limited to just Apple’s trio of native apps, what would have been an otherwise perfect compromise between what Apple was willing to do and what consumers wanted, is now almost superfluous. A neat trick of engineering that will rarely be used or needed.

For the sake of being optimistic, I hope that this limitation with AirPlay is merely temporary while 3rd party apps are updated by their developers to be compatible with the new feature… but I’m not very convinced this will happen. Some other blogs have pointed out that 3rd party video *was* working in the beta of 4.2 but was subsequently disabled in the final release. Apple, what say you to this?

Update: Apple got back to us rather sooner than we thought, or at least, MacRumours thinks Steve Jobs has gotten back to us. In an email reply reportedly sent to one of their site’s readers, who asked about Safari YouTube and 3rd party support, the iCEO himself said he “hopes to add these features to AirPlay in 2011.” I don’t know if we can bank on one as-yet unvalidated email, but here’s hoping!

Okay, your turn: Have you used AirPlay yet? If so, do you think it’s a feature you’ll be using on a regular basis? Let us know.