Seems like Apple hasn't mastered video streaming compression as well as OnLive. OnLive seemed pretty playable to me when I tried it.
OnLive's protocol seems to be far more willing to sacrifice frames and quality to keep everything in sync; where AirPlay will (in my experience) hold up the stream until every last frame gets through, sync be damned. Also, AirPlay doesn't modify apps or input at all to compensate for the lag to the TV.