Hi Anthony,
Sorry for the delayed response, I am sort of on a crazy schedule for much of the rest of the year.
The stream stopping is actually a conscious decision. When I was writing the app, I was faced with one of two decisions-- when a user invokes a stream, do I allow it to continue transcoding if the user stops the stream, or do I stop the stream myself? In the former case, the backend does no throttling of HLS transcodes and will let you completely crush it under the weight of many streams, so that's a bad idea. In the latter case if the user wants to go back to it later, the stream has to start all over. I chose to stop the streams to avoid compromising the backend.
That said, it's possible I can avoid closing the stream when the app backgrounds (and only do so when the user actively clicks "done"). When I get some time I will look at this. It may be a bit as (mentioned above) the rest of 2013 involves a lot of travel and erratic work schedule.
Regarding the error popup, it's not something I see here. The app itself doesn't request a network connect, it occurs at a lower level than the app-- but I'll see if there's a smoking gun somewhere.
Finally, I've considered having a screen of the available streams. One of these days I will probably add that too. Because the framework I built the app on is EOL, I'm approaching a day where I'll have to decide whether to update the framework myself and stay ahead of changed to the iOS SDK, or rewrite using a more modern framework. I haven't decided yet.
Thanks,
Robert