so...playing 1080p and/or higher bit rates=enabling piracy??? and why would this be apple's concern, anyway?
I did say "Full HD would be nice". But just how many BluRay movies / tv shows are actually 1080 ? I seem to find that anything above 540p qualifies as HD, and if your selected movie has an insane aspect ration like 2.8:1 (Ben Hur), even 2.35:1 (Gladiator, Lord of the Rings), you end up with 720 at best. Still, Full HD would be nice. I do think it may be something to do with the CPU grunt required to decode 1080p over 720p may be just too much for the unit. Or rather the heat that would be produced may be too much, it is a sealed unit and mine is constantly warm even when idle, it's uncomfortably hot when watching even non-HD content.
We'd also have to discuss whether ripping BluRay is Fair Use, or if it is contrary to the DMCA.
See, I have no issue with havng to encode my camcorder video to H264 so it can be played through AppleTV, takes the MacPro seconds to encode anything.
And I don't record in full HD any more, it just creates bigger files and quality difference above 720 is minimal - the same amount of light comes through the lens. Same with my still cameras - all Nikons - 12MP, but I never shoot above 6MP (well OK, a few tripod-assisted scenery shots at 12MP).
It does sound like we use it for very similar purposes - I too have 2 toddlers who love nothing more than handling, bending, sucking on discs too. I keep mine on the top shelves of the bookcases. I even use a few printable DVD-Rs (printed with dinosaurs and pirates and the like) as decoys to keep them away from the real discs. But I don't think Apple sees us as their target audience for AppleTV, Movies and TV Shows on demand seems to be plan, and for that the studios may insist on, and bandwidth may demand (and again heat from CPU decoding may also demand) 720p maximum.
Still, who knows what will happen at WWDC ?