My approach
First of all, let me suggest to you that ripping movies for AppleTV is a marathon and not a sprint. When I first embraced my ATV around the time Take 2 came out, I was going nuts trying to rip and plan as much as possible around the multiple computers we have in the house. It takes handbrake a while to compress and if you're not patient, you can go insane. I don't know how much time has passed since Take 2 was announced, but I'm close to 400 movies now and that's not including a bunch of tv shows I've ripped.
My first suggest (something I've opposed in the past) is to rip the feature off the dvd using mactheripper or whatever they use on a pc. Most discs rip fine but if it's a New Line movie release in the last year or so, forget MTR. God only knows what New Line does but MTR3 will most certainly crash.
Anyway, using MTR is kind of an extra step but it reduces the wear and tear on your dvd drive because MTR doesn't compress the movie. Instead it just copies data to your hard drive which takes significantly less time. Also, taking this step allows you have multiple movies to convert in a queue instead of converting one movie at a time. I find taking this first step immensely convenient.
Next (and more relevant to your question), I use Handbrake to convert my movies to ATV. Handbrake has a ATV setting but I amend it. After I select their preset, I turn on 2 pass encoding along with turbo first pass. Second, I go into picture settings and turn deinterlace on slow.
When I first started ripping for the ATV, I never turned on deinterlace and would get images with jagged aliasing, especially when there was fast movement. I put deinterlacing on slow and most of the jaggedness seemed to go away. After that, I came to realize that when there was a lot of camera movement, the image sometimes looked like it was slightly skipping. On a whim, I turned deinterlacing on slow and the image skipping has gone away.
The only issues I have know are when I'm ripping thing that are 4x3 instead of 16x9 and it drives me nuts because it's not consistent. I've ripped tv shows like MASH and The Simpsons without trouble, but sometimes when I rip old movies or stand up shows, I get that skipiness back when there are fast camera movements.
Best of Luck
