thinking of getting an apple tv..few q's

I've been looking at the apple tv online lately being very tempted to order one however I have a few questions about it. It also seems that no one sells the thing except for apple stores themselves so I haven't seen it in person.

I have a lot of self captured episodes of tv shows(ex: familyguy, simpsons, south park, etc)in H.264 format on Hard Drive hooked to my mac. All these shows are 4x3 as well. Does the apple tv automatically stretch the content to 16:9 to fit the widescreen tv? I have a panasonic 32" lcd and would hate for the shows to get stretched like iTunes does on my iPod Touch.

The other question is because my tv is a 1080i set it has a native resolution of 1366 x 768 and wont accept anything else as it will not fill the screen properly otherwise. Does anyone know if the appletv supports it?

Thanks I hope to join the mass tv users shortly

thanks for the responses. Right now my plan is to indeed get the 40gb and stream content over my Gigabit wired lan to the device so I don't need the extra space I was tempted at one point to build my own mythtv htpc box but with some many unknowns in hardware/software compatibility it makes the apple tv the perfect choice.