What on earth is iTeX?

It is a joke. Knuth is known for his "professional humor", see http://en.wikipedia.org/wiki/Donald_Knuth#Humor.

All i components of Apple are presented in San Francisco, where also the last TUG meeting (32 years of TeX) was held. This was the reason why Knuth introduced the iTeX in his talk with an audio visuell logo ... It was a joke ...

It's worth documenting that there is another, non-joke, iTeX.

WebTeX was a restricted subset of LaTeX that was designed for rendering as webpages, offering a more sophisticated layout model than CSS. Paul Gartside took a subset of that focussed on rendering mathematics, called it iTeX, and wrote a converter to MathML, which he called itex2mml.

Jacques Distler is currently maintaining itex2mml, and provides documentation of the iTeX language and the itex2mml utility.