If by "squished" you mean the picture is distorted out of its intended aspect ratio, that would be unusual for an HDTV with component inputs, and a widescreen emulation mode. Realize the Apple TV only puts out a 16:9 signal (hence the requirement for a widescreen TV), so on a 4:3 TV, you will always have black bars at the top and bottom, even when looking at the menu page. But the picture will not be distorted out of its intended aspect ratio. Now, if you display 4:3 content (like some TV shows, or non-widescreen movies) through Apple TV on a 4:3 TV set, you will now not only have the black bars at the top and bottom, but you will also have black bars on the side, since the ATV assumes it output is going to a widescreen TV. Some TVs have the capability to stretch or zoom that kind of picture, but it depends on the TV. Mine can't, but I don't have much non-widescreen content, and the bars at the top and bottom don't bother me, at least not enough to buy a new set yet!