Just to note that the install took a long time. For a while, I was afraid the AppleTV had frozen -- enough that I searched for my micro-USB cable in case I had to restore in iTunes. I even put a piece of tape on the screen to see whether the install was processing. Eventually it progressed through the screens and successfully completed.
I gave up waiting and pulled the plug out the back of mine. It had been approximately 40mins stuck at the same place (about 3/4 through preparing). I've now successfully done it in about 2 mins on the second attempt