2) Yes, anything real-time is like this.
2) Yes, anything real-time is like this.
You can only move forward in the frames you display. You can't walk back in time to evaluate a player's action in relation to their latency and then reconcile game state with all other clients.
That's exactly what properly engineered network games do. However we're talking about video streaming here, in which you don't have access to any game state. It's not possible to do without the developer going in and adding specific feature support for your streaming service.
As for the adjustment... Yes bringing a character back to life after a momentary error, in one place on the map, as seen by one person, is a small adjustment that happens rarely.
The purpose of streaming is to remove the need for the simulation and rendering at all. The client is a dumb terminal that just renders frames and records input.
The moment you start making the client smart again — making it aware of a subset of the world state, making it do its own rendering based on the input — you've just reinvented current client-server gaming.
You still get to run a physics model and game logic though and that is a non-neglible part of modern games.