I have a feeling that milepoint works the same as Magazine for miles, and milepoint makes its money from the merchant (and not from the airline).
*** UPDATE - I got information that this is not true, and that the two models are different ***

The airline->HHonor question is quite interesting, and I'll speculate that both parties assign some value to the miles and the points - with the expectation that Hilton is buying more miles. When AA and Hilton allowed AA->Hilton, the conversion rate was half of what other airlines had agreed on previously. As Randy mentioned, AA could care less about reducing their liability for miles.

[This message has been edited by PG (edited 06-11-2002).]