Based on the teardown estimates, Apple is barely making any money off AppleTV, so I doubt there will be a substantial update any time soon. I don't think it will ever gain DVR functionality, just as iPods do not have FM radio. Combining it with a cable set-top box and a Tivo recorder would be too expensive and much more complicated to operate. I am pretty sure digital broadcast standards vary quite a bit from country to country, so it would be nightmare to support them all. Anyways, you guys already know all these, but I guess you have to fantasize about the possibility.Yeah the current Apple TV is too limited by its hardware.
Rentals is pretty much the best Apple can do.