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I only use iTunes for Music, Podcasts, and TV shows (recorded from my EyeTV). All my Movies are ripped in Handbrake encoded x264 MKV files, and I use my PS3 (with PS3 Media Server) to stream them to the HDTV.


So basically the Apple TV has the following uses for me:
  1. Watching YouTube directly on Apple TV
  2. Watching Movie and TV rentals directly on Apple TV
  3. Streaming Music, through AirPlay or iTunes sharing
  4. Streaming Podcasts
  5. Streaming TV Shows
  6. AirPlay from iPhones or iPads to play Music, Photos, Videos.
  7. ** AirPlay to stream Plex from iPhone/iPad to play MKV encoded movies
  8. ** AirPlay to watch MLB At Bat from iPhone/iPad to stream baseball games

**: Hopefully AirPlay will work with 3rd party apps, otherwise these obviously won't work.
 
When ripping Blu-ray discs, can I bring it at 1080p into iTunes and then will automatically ATV read as 720p? The reason for this is that I want to be future proof. Maybe when ATV supports 1080p down the road I don't want to transcode it again at higher res.

I don't believe I saw this question answered yet...unfortunately no, the :apple:TV won't downscale to 720p.

I had a similar dilemma when I started ripping/encoding my blu-ray disks as we watch on everything from iPhones/iPods to a 50" plasma with a Mac Mini hooked up running PLEX (and everything in-between) and I really wanted to limit the number of versions of each movie/show. Ultimately I decided on encoding all my BD at 720p with a few custom anamorphic modifications--check out tommylotto's advice in this thread that result in a higher resolution picture for viewing on PLEX but is still playable on an :apple:TV/iPad. If it's a movie my kids can watch, I also encode a version that's compatible with their second gen iPod Touches. For a select few movies, I will also do a 1080p version if I really want to get the best picture possible to watch on my Mini but too be honest, 720p looks great.
 
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