Specifically, their most recent implementation.
http://www.numenta.com/htm-overview/htm-algorithms.php
Essentially, I'm asking whether non-euclidean relationships, or relationships in patterns that exceed the dimensionality of the inputs, can be effectively inferred by the algorithm in its present state?
HTM uses Euclidean geometry to determine "neighborship" when analyzing patterns. Consistently framed input causes the algorithm to exhibit predictive behavior, and sequence length is practically unlimited. This algorithm learns very well - but I'm wondering whether it has the capacity to infer nonlinear attributes from its input data.
For example, if you input the entire set of texts from Project Gutenberg, it's going to pick up on the set of probabilistic rules that comprise English spelling, grammar, and readily apparent features from the subject matter, such as gender associations with words, and so forth. These are first level "linear" relations, and can be easily defined with probabilities in a logical network.
A nonlinear relation would be an association of assumptions and implications, such as "Time flies like an arrow, fruit flies like a banana." If correctly framed, the ambiguity of the sentence causes a predictive interpretation of the sentence to generate many possible meanings.
If the algorithm is capable of "understanding" nonlinear relations, then it would be able to process the first phrase and correctly identify that "Time flies" is talking about time doing something, and "fruit flies" are a type of bug.
The answer to the question is probably a simple one to find, but I can't decide either way. Does mapping down the input into a uniform, 2d, Euclidean plane preclude the association of nonlinear attributes of the data?
If it doesn't prevent nonlinear associations, my assumption would then be that you could simply vary the resolution, repetition, and other input attributes to automate the discovery of nonlinear relations - in effect, adding a "think harder" process to the algorithm.
From what I understand of HTM's, the structure of layers and columns mimics the structure of the neocortex. See appendix B here: http://www.numenta.com/htm-overview/education/HTM_CorticalLearningAlgorithms.pdf
So the short answer would be that since the brain can understand non-linear phenomenon with this structure, so can an HTM.
Initial, instantaneous sensory input is indeed mapped to 2D regions within an HTM. This does not limit HTM's to dealing with 2D representations any more than a one dimensional string of bits is limited to representing only one dimensional things. It's just a way of encoding stuff so that sparse distributed representations can be formed and their efficiencies can be taken advantage of.
To answer your question about Project Gutenberg, I don't think an HTM will really understand language without first understanding the physical world on which language is based and creates symbols for. That said, this is a very interesting sequence for an HTM, since predictions are only made in one direction, and in a way the understanding of what's happening to the fruit goes backwards. i.e. I see the pattern 'flies like a' and assume the phrase applies to the fruit the same way it did to time. HTM's do group subsequent input (words in this case) together at higher levels, so if you used Fuzzy Grouping (perhaps) as Davide Maltoni has shown to be effective, the two halves of the sentence could be grouped together into the same high level representation and feedback could be sent down linking the two specific sentences. Numenta, to my knowledge has not done too much with feedback messages yet, but it's definitely part of the theory.