I wouldn't be at all surprised if this was intentional in order prevent devs creating HTML5 games on par with those of the AppStore.
So games, music, and video apps in mobile Safari are all hopelessly hobbled, and if you build a browser that fixes these issues you'll be banned.
Happy developing!
It also prevents MySpace. I consider that a Good Thing overall - I remember the period of the web where it was trivial to auto-play video and audio, and I remember that the consumer reaction to that was deeply hostile. HTML5 music/video apps certainly are an interesting thought, but you must consider what happens when you let random or malicious developers do those things too!
On desktops with Flash or the HTML5 Audio/Video API you can already do these things. I don't see anyone complaining that things like Youtube and Grooveshark are malicious, so why should iOS be sabotaged? Non-Apple devices like Android, and Playbook work just fine. You can build music, and video, and game web applications on those devices without these limitations, and it is not a problem. Apple simply wants a hobbled platform, to force all content through the iTunes store instead of over the internet.
I argue that Apple's focus on the user experience, especially in the areas of responsiveness, battery life, and consistency with the general Apple design aesthetic, cause Apple to make choices here that you disagree with, but which aren't necessarily bad decisions.
"You can build music, and video, and game web applications on those devices without these limitations, and it is not a problem."
Actually it is a problem: Android malware exists, and I say that it proves my point: if you hand out capabilities without thinking through the consequences, it will come back and bite you.
The uses that you intend for tools are never the only possible uses of those tools.