Those who criticize the Apple TV are not willing to accept it for what it is...a means of outputting your iTunes content very efficiently on your large screen HD TV. Many folks seem to be declaring the Apple TV a failure since it does not do what THEY wanted it to do and be. If you don't like it for what it is, that is fine, don't buy it.
We have two Apple TVs at our home. One for our living-room and one for the bedroom. We have two Macs (a Mac Pro and and IMAC) serving iTunes content (movies, music, TV shows and photos) to the two Apple TVs via WIFI (Apple Extreme 802.11n) and it all works great! We have over 1.5 terabytes of content and enjoy every bit of it on our Apple TVs.
Several of our PC friends have recently purchased their first Macs just because they enjoyed our Apple TVs so much when they visited us. Apple TV is converting a lot of PC folks to mac users once they see what the Apple TV can do.
So, is the Apple TV a flop...hell no! In fact, I think that it does everything that Apple said it would do and more. We sure would not want to be without our Apple TVs. We rarely view satellite TV any more since we set up or Apple TV entertainment systems and converted all our movies and TV shows to play on them. As far as the quality of movies and TV shows go, if you rip them in high quality yourself they look GREAT!! Handbrake does a great job with ripping your DVDs for use on your Apple TV.
The article referenced is a perfect example of one written by someone who does not understand what to hell he is talking about.
Dave