Yeah not sure why some are still so adamant the uses of Tivo and ATV don't overlap.
I think some folks didn't really pay attention to the word overlap.
Sure you can't watch recorded episodes of Mash on ATV, but can you buy them? If iTunes has them you can and thus you can accomplish the same goal you had.
And watching a recorded episode of LOST seems like the same thing as buying it from iTunes and watching it on your ATV to me.

I'm pretty sure you can do that.
To me that's overlap. Both are examples of on-demand viewing. There are differences no doubt. But there are similarities too and thus overlap.
Converting your DiVX files to H.264 seems like the same thing as converting your DiVX files to .tivo format which is really just an MPEG wrapper. IF you're already ripping content to your hard drive and converting it from the Video_TS files so your ATV can read then you can't complain that converting it to .tivo isn't practical and that your wife can't do it. Oh and afaik you can hack Tivos too.
And on Tivo I move through a list of movies 1 by 1 in order to select them just like on ATV.
No doubt Cable has more channels, but that's doesn't mean iTunes content doesn't overlap with it. Everything on iTunes is on Cable. That's called overlap.
My Tivo sees the photos and music on my Mac. And I can play it through my stereo. That seems like overlap to me too. Now I think the ATV is slicker, but Tivo gets the job done.
That's why I haven't picked up an ATV. I can already pretty much do what it does because of something called overlap. And yet if I purchased one I'd still have to keep my Tivo, DVD player and cable subscription because ATV doesn't replace any of those devices at least not today.
ATV is marketed as 'What's on iTunes is on AppleTV' not as 'Rip your 600-DVD collection to 1.5 TB of mirrored hard drives and watch them on ATV.'
Now I'm saying each device is just as easy to use as the other in all areas nor does it mean each device isn't better suited for some uses than the other. I don't think I said that anywhere. That's not what overlap means in my world though.