A few points:

- Remote Buddy's AJAX Remote is just a web application that can not 
change any settings or the behaviour of your iPod Touch. It does not 
install software on the iPod Touch, does not modify your iPod Touch's 
software or require you to modify it and generally has no way to 
access any part of your device at all.

- just like any web app, it has absolutely no control over whether or 
not your iPod Touch goes to sleep or not. That's a feature of the iPod 
Touch software itself over which a web app has no control as it has no 
possibility to access any APIs or leave the sandbox of the browser.

- the AJAX Remote's Music code has not changed at all between 1.7.x 
and 1.8

- as AJAX Remote is just a web application, it's also subject to the 
limitations of a web application. That means, that for something like 
a self-updating now playing display, data needs to be constantly 
polled. Pushing data is not possible with a web application. Special 
care is taken, though, for the amount of data to be transfered to be 
absolutely minimal, reducing both load on your Mac (0% - 0.1% on my 
MacBook Pro) and on your iPod Touch.

If your iPod Touch does not go to sleep, please check your device's 
settings:

Settings > General > Auto-Lock

If the auto-lock does not perform as you expect it, please file a bug 
with Apple at

http://bugreporter.apple.com/

as they are the only ones able to do anything about it.

Best regards, 
Felix