Thanks for the response. It sounds like you fully understand what I've been navigating.
Ultimately, I think Apple Home Sharing while using Apple TV will meet my needs. I still wish I could use purchased media for virtual channels, but you can't have everything.
I've used PlayOn. It's a great service and Channels has made the integration really nice. Like others, I question if it violates terms of service for on demand content. (I think back to the people sued in the Napster years) But, my bigger concern with with PlayOn involves passwords for Amazon, Google, and Apple. The passwords for those services have so many payment methods, email accounts, and personal information tied to them. I have the same concerns with Movies anywhere. I did it for Amazon and Google, but I questioned it by the time I got around to providing my Apple ID.