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long tail
The answer to question one is clearly yes, most emphatically for content that you can't get or that's hard to find elsewhere. I know people who *only* watch television shows that they download from the Internet. I recently found the unaired original pilot of "Buffy the Vampire Slayer" on YouTube, which had been viewed over 35,000 times by the time I got to it. It's been online since March, and the content owner (News Corp.) may not be overly concerned since it's not likely to have anything but a positive impact on sales of DVDs and other Buffyverse-related merchandise.
Ultimately, I think the risk to big content owners that don't start moving to the Internet is becoming irrelevant--as you say, Dave, "TV is going the same way as the music industry."