So here is my question: did the missing Malaysia 777 keep sending 'telemetry' data to R-R until the engines stopped?
You obviously need some sort of "channel" to send your telemetry. My understanding is that it can be relayed trough ground stations and/or satellite, at an extra cost. The airline is not using (paying for) the satellite service so there was no telemetry sent once the aircraft left ground coverage.
Or did this data stream stop after the first hour or so – and if so why?
That's the 1 bn $ question... Apparently the Malaysian authorities believe it was a deliberate action (be it crew or someone else in control of the aircraft).
Side note about the "debris" sighting - I am of the firm belief that if nothing else this unfortunate incident will probably rise the awareness of the general public abut the amount of junk floating in the ocean...