Not sure if anyone is using WiFi in-seat entertainment devices yet but sure sounds like a good idea.
I would be a bit skeptical that -all- in-seat entertainment including on demand movies could be provided via available wifi bandwidth.
A multicast/broadcast scheme with local buffering for pause etc could work but that would require compatible user device apps, which may/may not exist or be commonly available.
In any case not all passengers will have/want to use their own devices so a seat back display would still be needed.
What I want is for the airline to provide a jack that allows the seat back display to be used by the i-phone/pad/whatever.