is it not possible to do this by using a "local handheld" ?
Yes, you could, but it would be difficult to use if you wanted to actually use MC to PLAY the media while you are "away from the server connection". You'd essentially need to make a new, separate MC library, and import those files in the "local handheld" back into MC. That means you don't have the same library and don't keep tracking things like number of plays and other library changes.
I'm thinking (and I think Osho was suggesting in a roundabout way), that it would be cool if MC could run a client copy of MC in "offline mode". So, imagine this:
You're going away on a trip. You open up the laptop before you leave and connect to your server, and sync a bunch of movies/music to the Offline Cache. Then, you leave and take your laptop with you. You "connect" to the "server" again while you are in the car (to entertain the children, maybe), but you have no network connection so MC goes into "offline mode" using the last cached copy of the library that it has, and only using the files you'd previously synced over to the laptop.
When you get to the airport where there is WiFi, MC can reconnect and sync Library changes back (like number of plays and whatnot), and maybe you even sync some new content before you get on the plane. And so on and so forth until you get back from your trip.
That would be an awesome feature for MC18.