#1 if Jose is streaming to Sue, there's no middle server here. PPSP doesn't mandate a "central server", and I hope on the swirl website I can make this use case clear too.
I'd love us to be able to stream from our devices to friends etc and not need to store everything on youtube or dropbox or some other indexed/sliced/diced/resold for profit system. With PPSP however you could have your home network be a peer, and pull down the content safe and sound with minimal impact to your phone. This type of sharing is something I would love to roll out for journalists in the field, protesters in Venezuela and Ukraine, where media suppression by the government and confiscation of phones is a sad reality.
#2 Spoken like a true American ;-). This is not the reality for 99% of the internet users. I'm unable to get more than shoddy ADSL, even in a major European city. What about India, China, Africa, South America? Places where the monthly income is not even close to $200. Hopefully that will change over time, but it's not practical for most people today.
I concur that live P2P streaming is tricky, and I'm sure you have plenty of practical experience to back that up.
PPSP allows DVR style seek / record, the way the protocol is laid out makes that almost trivial. Now if your device at home doesn't have that content, you'll need to retrieve that from a peer, and I'd like to see that peer be close to you.
Today, with bit torrent & friends, there's no standard implementation to refer to, so there's no way for an ISP to put an intermediary cache in to support the functionality you want, assuming you're paying a premium for that content, which is what is done with HTTP & friends on a regular basis.
By having a standard protocol in place, multiple implementations & vendors can share the same caching peer technology within a single telco's network. Those peers can be located at edges within the exchange, similar to how major CDNs and google etc do today.
Finally, PPSP is more than just streaming, it's a completely new transport layer protocol for the internet -- like HTTP, we're only just beginning to explore the use cases.