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Does live(ish) bittorrent streaming work?

Yes, it does. Most popular bit-torrent p2p streaming solution now is Acestream. You can check it yourself.

However, I doubt that 'fully loaded' Kodi boxes uses it, most likely it use simple m3u streams harvested from internets.

I didn't know acestream was p2p. I think I may have used it one or twice. Very cool.