Mods: Sorry for the cross-posting. I meant to post this in this thread (the owners thread) originally...
OK, so it took my only about 5 minutes to get my aTV out of the box and completely set up, including setting up my Home Sharing and signing into my Netflix account. Using the on-screen keyboard is a PITA, but you only really have to use it to set up the WiFi password (if applicable), and Home Sharing login/password, and after that you can use the iOS Remote app for any keyboard duties.
The big question on everyone's mind is 1080p content, so let me address that straight away. Yes, you can play a 1080p m4v file (my test file was converted in Handbrake as High Profile, RF21), but it will drop frames. In the case of my test file I guess I could say it dropped few enough so as to impress me, but it would still be unwatchable for me. Most importantly, though, the aTV is definitely downscaling it to 720p (my TV reports a 720p signal), so what's the point?
I will add that I'm testing this over 802.11n (5GHz connecting to the latest revision AirPort Extreme), so dropped frames *could* be due to that. I also tested out a 720p m4v file of the same movie (RF16, no filters), and it also appeared to have a glitch here or there which concerns me much more. I'm going to test out my RF19 720p file, as well as test out all three over wired ethernet.
FWIW, I'd say that Netflix played back with equal PQ as it does on my TiVo HD (which is better PQ than I was able to get on the WDTV Live and via Silverlight on my Acer Revo Atom/NVIDIA ION nettop. FWIW, I found that the Seagate Theater+ offers good Netflix PQ as well). Now, even at its best, I find much of the Netflix content's PQ to be pretty bad. The movie "Who's Harry Crumb" is listed as HD on Netflix's site (Note: the Netflix UI within the aTV does not appear to indicate whether a movie is HD or not) but has horrible macroblocking in the black background during the intro. The movie CGI animaged movie "Area 51" looks much better, though Netflix doesn't indicate if this is HD.
I was disappointed when I attempted to stream the Avatar movie trailer. It took about 25 secs to start playing (it's a 3 min 29 sec trailer). Once it started it looked great (720p I imagine) but it reached the end of the buffer halfway through and needed to rebuffer for a short while again. My downstream internet should be about 15Mbps, so this surprised me. I just tried another trailer (The Green Hornet) and it took about the 25-30 secs to buffer before it would start, but it never paused (in order to catch up on the buffer) after that. That's a 2 min 28 sec trailer, to give you an idea. I'm guessing the Avatar trailer is a higher bitrate. I'll also try streaming these trailers later over wired ethernet to see if that makes a difference.
The UI is overall a joy to use, but I'm not a fan of the tiled movie UI. Thank goodness it only uses this view for the movies and shows they're trying to sell you, and your own library of movies displays in a title list format (which you can filter by genre).
Edit: I've since tried connected via ethernet, and I'm still seeing some glitches in playback of my 720p m4v test file. They're not frequent, and my wife would probably never notice them, but I do, and they're really annoying. I can live with 720p, but not-perfectly-smooth playback? That may be asking too much. Rewinding and playing the same scene will not display the glitches in exactly the same place, so I don't believe it's with my encoding (plus I played these files on my Acer Revo and don't believe I had any glitches there). I'll be interested in hearing reports from others.