from my expierence it has worked fine converting movies to ipod format. I have not tried converting to the ATV considering i don't have one.
I was disappointed that it wont take .avi files. I have about 10 of them i need to switch to ipod format and can't figure out how.
I usually use handbrake to rip my movies, and if i need to convert them i use toast. And it converts videos much much faster than quicktime pro does.