How can I use home sharing between our iphones (create playlists from both accounts at once)

How can I use home sharing between our iphones, so that we can create playlists with songs from both of our libraries?  We share a Macbook Pro (separate accounts) and each have the new iphone, but when I have my iphone and try to create a new playlist, I can only grab songs from one account.  Is there a way to create a playlist using both accounts since we are sharing?
Does it have to be created within iTunes first on our Mac?

The short answer: because Home Sharing isn't designed for sharing apps, and apps aren't designed to be shared.
The longer answer:  Think of it like this...
You download some music in iTunes.  With Home Sharing, another user can listen to it by streaming it over the network.  But the data itself is on your computer.  If you turn off the computer or take it off the network, the other user can't access it.
But if you send another user the app, they aren't just streaming the data- they installed it on their iOS device.  Because they weren't the one that purchased it, such a transfer could easily be considered "piracy" or "stealing," and nobody likes that (least of all, Apple). 
When iTunes sees this app, it obviously recognized it, as if saying, "Hey, how did you get this app on your device, if I have no record of you purchasing/downloading it from the iTunes store?"
post edited to correct spelling errors

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