Is this thread for real? You can't watch bittorrent files. You can watch the video files you download through bittorrent though if you convert them to an ATV compatible format.
I had a look at the app the OP was referring to. You are right - there is no way to directly download and watch BT files. However,as I mentioned, you can use e.g. ATVFiles to play them on the ATV.
You can either use software like Handbrake to convert your files to ATV compatible files, or you can install Boxee on your ATV and stream files from your computer without converting them.
Is this thread for real? You can't watch bittorrent files. You can watch the video files you download through bittorrent though if you convert them to an ATV compatible format.
I have boxee on my ATV and I have been converting files to be viewed on my ATV.
How can I just stream the avi format so that I don't have to waste time converting the files?
Boxee has a built in torrent client that will automatically start streaming torrents (which you put in a specific folder) down to your AppleTV. Once complete you can browse/watch the file(s) contained in the Torrent. For a little more info see the Gizmodo article:
http://gizmodo.com/5082130/how-to-max-out-apple-tvs-potential-with-boxee
section: "Torrent RSS"