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First is how things like  home videos, and the like, should not be
integrated into a user interaction system that is basically designed
for TV shows (ie the Watch Recordings screen).
I have to agree about this, I don't have home videos, but I can see
how that would be initially confusing, and organizationally odd. That
said, I could see how, with proper planning, this situation could be
handled smoothly with some added features to the the interface of the
Watch Recordings screen.

The other is the concept of the temporary nature of recordings vs the
permanency of other sourced material.
For this, while I can see the initial concern, it seems based on the
idea that the issues could not be easily overcome. I'm trying to
understand Mr Kerr's concern about mixing tv recorded episodes and
"saved"(ie physical media sourced, or transcoded recordings) episodes.
If I understand correctly, his concerns are that
- he may delete episodes he means to keep?
- that he won't know that a recording is a recording and will be
deleted over time?

So let me throw out some idea as to how this could be done, with these
two concerns in mind.

First, "Groups" needs to be converted to a tags system. I think this
is obvious and somewhat regardless of any other changes. Minimally it
would work the same, but put to good use would provide a high level of
powerful filtering. So lets assume, from the beginning that whether
this occurs before, or as part of, the integration, that this is a
component we get to work with.
Lets also, for the sake of clarity, continue to refer to non-tv
recorded material as Videos, and tv as, well, TV.
Automatic tagging of Videos by their stored folder location, should
occur, and should be dynamic. How this occurs, auto-naming by folder
name, or by a specific user given tag name for items in that folder is
of no concern overall.
IE if one has a "Home Videos" folder in their Videos heirarchy, all
videos under that will be auto-tagged with that folders tag.
in such a way, ripped movies, placed in a "Movies" folder, could then
also be auto-tagged as "Movie", etc.
A tag feature that would be useful to solve some of the issues are the
idea of "root" tags, or tags that have a greater hierarchical
significance, "Categories" we'll call them, some will be built in,
others can be created by the user. Built-in ones, which will have
special functioning in the interface should include: Recorded, TV
Shows, and Movies. Perhaps others?