There's likely no need for a new processor--Using XBMC the ATV2 does just fine decoding h264 1080p material at the bitrates Apple is likely to offer through the iTunes store. The issue is getting it to output 1080p to a display. No one seems to know if this is a hardware or a software issue--hoping it's the latter and we get 1080p on current ATV2 with iOS 5...
I hope you are right. I've generally heard that while the existing hardware can decode 1080p, the playback of some of that will stutter. If true, it could mean that the hardware is just barely able to do the task... and not completely. Or it could mean that the playback code needs further optimization.
I have heard (but you're right that no one seems to know for certain) that the output gate is hardware (limited to 720p) and can't be changed. As such, my guess is that we will need new hardware. If so, I hope that Apple just finally hits a home run with 1080p hardware capable enough to handle max 1080p standards instead of some minimal incarnation. I'd love to see enough horses to deal with 1080p/60fps with the theoretical max of the AVC standard (anything BD could handle, so could Apple's answer to the "bag of hurt").
Now before this yields 50 posts against 1080p/60fps/max AVC because of "bandwidth is too limited", "storage", "the chart", etc, I'd clarify that giving us much more robust hardware than what current software can handle is doing nothing different than Apple does in just about every other computing platform they produce. For example, 4-core processors are rarely taxed by the software they run but it's nice that they can handle the load when the software gets around to catching up. I hope this next

TV is like that: maxed so that we can throw ANY 1080p content at it and it can handle it without issue; however, until then, its better hardware will be able to fully deal with lighter & thinner software such as the SD & 720p media available now. If Apple doesn't believe in the "bag of hurt," it would be great to offer a toe-to-toe alternative on the most mainstream benefits like picture & sound. I hope they get it thoroughly right this time.
We've got camcorders that can shoot 1080p/60fps. We've got Apple software that can process it. We've got Apple software that can store the renders. How about an

TV that can push it from iTunes to the HDTV? (and not

TV4 or 5)