You're asking good questions and I appreciate your diligence and skepticism. If you do eventually buy, you'll most likely buy smarter than most. Either way, you'll have made an informed decision.
The rental market is stronger because of the economic problems. People who have lost their houses must live somewhere and the most viable option is to rent.
People who are afraid to buy because of the economy's uncertainty flee to the "safety" of a rental while they wait for the ground to solidify.
Very few foreclosures that have made their way to the market are becoming rentals. Many, if not most, are usually bought by owner/occupants. Those that are converted to rentals are easily rented due the reasons already listed above.
I think the Barron's article already addressed the Demographics side of the equation. It's (the rental market) looking good for the foreseeable future.
The "icing on the cake" is that when the economy (and ultimately housing) does regain its footing and home ownership comes back into a more favorable light, the value of the rental houses will rise again and you can sell them for a tidy profit.
In the meantime, the tenants will have made the mortgage payments, insurance payments and paid for the Landlord's equity (my spreadsheet calculates that my tenants are paying $7,416.00 this year towards my equity) which he can then cash out. IF you buy right you will do fine. Too many homeowners and investors over-leveraged and are paying a high price for not having done proper due diligence.
If done right, it's a win-win scenario.