This is a great use of the iPad! Document cameras are excellent: especially in elementary classrooms. Suzy Brooks, a teacher in Falmouth, MA, has excellent examples of this on her blog: 3rd Graders Dreaming Big (http://blogs.falmouth.k12.ma.us/simplysuzy/)
This is an interesting classroom management concept for 1:1 situations when teachers want to control the presented content. Not sure about the ability for students to interact with content, but they could take screencaptures and add to their notes easily. Lots of potential.