Recomendations for simultaneous use interactive drawing application for iPADs I need to tutor my nephew in algebra.  He's 3000 miles away.  We both have iPads.  Skype or the phone can handle the voice channel.

I would like an application with the following:


Each of us can draw on our ipad at the same time, Whatever we draw appears on the other screen.  
Option for different colors.  E.g. He draws in black, I draw in red.
Ability for either person to erase/modify their work, with a toggle to switch between 'erase mine' vs 'erase evertything under the eraser'
Ability to hit a one button save/mail screen.
Ability to scroll/magnify screen.  Each iPad has a several viewport on the canvas.  
Ability to snap and crop a picture and paste into screen.
Inexpensive.


In essence, I want to set him a problem, or allow him to snap a picture of a problem.  Then while he works it, I can 'red-line' places where he has made an error, taken an invalid shortcut, etc.  He can correct his error, leaving my redline, I can then check and remove my redline.

Nice to have:


Multiple sessions so I can work with several students at once.
Handwriting recognition that turns scrawled math into typeset equations.


So far the programs I've found have one or more of the following limitations:


A:  Only one person can draw at a time.
B:  Only one color can be in use at a time.
C:  You can't erase.
D:  Your canvas is limited to one screen
E:  Interaction is limited to WiFi.
F:  Interaction is one way:  It's essentially a presentation tool.
I think FlockDraw would be the best app for you. Although it is a web app, you could use it on an iPad by downloading a free Flash browser such as Puffin Web Browser.
List of Features:

draw online
unlimited people in a room
updates in real time
different colors
different shapes
eraser
ability to draw lines
one click saving
full screen mode
gallery to save and upload images
ability to type and draw
chat

In response to your limitations and requirements:
A: Only one person can draw at a time. - Two or more people can draw
B: Only one color can be in use at a time. - The large variety of colors allow for more than people to draw with different colors
C: You can't erase. - Eraser is provided.
D: Your canvas is limited to one screen - Well, each person can see the same screen so yes they are limited to it. If they wanted to, they could erase their canvas and start with a new one (Not sure what this is asking)
E: Interaction is limited to WiFi. - When you create a session, you are given an unique URL. You can share that URL and allow more than one person to join you session (This does not have to be through Wi-Fi)
F: Interaction is one way: It's essentially a presentation tool. Two people can draw at the same time.
1. Each of us can draw on our iPad at the same time, Whatever we draw appears on the other screen. Yes, drawing simultaneously is a feature.
2. Option for different colors. E.g. He draws in black, I draw in red. There are lots of colors to choose from
3. Ability for either person to erase/modify their work, with a toggle to switch between 'erase mine' vs 'erase evertything under the eraser' Sorry, don't think this is on here. There is only one eraser that has the ability to erase everything.
4. Ability to hit a one button save/mail screen. Yes, you can save the canvas.
5. Ability to scroll/magnify screen. Each iPad has a several viewport on the canvas. You may be able to; I haven't tried it on an iPad
6. Ability to snap and crop a picture and paste into screen. As you are on an iPad, this feature is included, but it may be harder to do on the iPad. But yes, there is a gallery.
7. Inexpensive. - It is completely free online
Note: There is an iPad/iPhone app, but I'm not sure that it is better than the web app. It also costs $2.99.