Airplay with iOS 7

Yes, its supposed to work, but…
No, it doesn’t, at least not completely.

As you have found out, an iOS device with operating system version 7 or 8 can only push Audio to an ATV1 via AirPlay. There appears to be no viable work around to get Video. Video & Audio work fine via AirPlay from MacOS.

As indicated in the post above, the problem is apparently with RemoteHD and not ATVFlash. RemoteHD development seems to have halted and it does not seem possible to get feedback via their support link.

However I urge you to use the link and ask for help. One day they may wake up again…