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I cant think of anything hardware-wise that would prevent you from streaming at 120 Hz, provided you have the bandwidth and encode/decode performance to handle it. Whether Valve allows it in software is an open question.
That said, this presumes that your TV is capable of receiving a 120 Hz input and that your target computer is capable of putting one out. I can't answer that one for you without more information (exact video card, and exact TV model - Bravia II is too general).
Would the Big Picture drivers for display take care of refresh rate?
You could install Steam client to living room PC then connect it to Bravia TV and start Big Picture mode in Steam. This should give a working answer to your question relative to your setup and would save you waiting on the beta invite before trying.
That said, some 3D capable TVs are overclockable to 120hz using either duallink-dvi, or hdmi 1.4a... so if you are just looking for that extra smoothness, try googling hdtv overclocking and connecting you tv directly ;)
Also most modern led monitors can overclock to 75hz, so go google that and enjoy :D
True 120hz+ is needed for 3D. Turn on 3D Vision for your GPU and all of a sudden 120hz is accessible.
Latency does not interfere with 120Hz... Don't mix bandwidth and latency.
Did you ever try to play a game via X-forwarding
Also, the problem with the network is not only the framerate, but the latency. You could like totally have a high frame rate but with several frames of lag.
@ReBoot
The thing is, that at 120fps you never see the frame you're actually controlling becasue there is 8.34ms of latency between each fram. Factor in an input lag of at least 2ms, framebuffer lag of 4 and display lag of around 8ms minimum and you struggle to see a response to what you're actually inputting on the very next frame even when you're at 60fps.
Add streaming and you're going to be sitting at a few frames behind input, but that's normal for many games at 30fps. The only thing that will be thrown into question is if the game feels any snappier at 120hz. It probably won't and the reduced frame lag (ms between frames) is offset by the increased compression.