Does anyone know if the new ATV still only has 8GB of storage space? Maybe that's why these bitrates are so low? That doesn't explain the lower file size than 720p though, at all.
If you're imagining that all movies have to be <8GB to fit into the available space of the
TV, that's not true. The
TV streams what it needs when it needs it. I've got some >20GB encodes that it plays just fine. Much like starting to watch a streamed film while it's still downloading on a computer, the
TV buffers enough to start playing then downloads more as it will be needed. If someone could get a >100GB film assembled, I would think the
TV would play it just fine.
BTW, this same concept likely applies to the fallacy of needing a new
TV with bigger SSD for apps too. Just like movies, apps could be streamed from the much bigger hard drive where the movies are stored. It streams over the app to be run, runs it and then streams over another app when you want to switch from one to another. Much like RAM in iDevices is relatively small and what is to be shown on screen is streamed into it and processed on the fly, I think it would work the same with
TV. Off topic but same idea.
Back on topic: OP, if you want maximum quality, don't build the collection in iTunes. Buy the BD and convert them yourself. Sure there is this perception that iTunes version is being encoded from a superior master- and that may be true- but you are then at the mercy of someone else deciding variables like bitrate and others that do effect end result quality. If you buy the BD, you get to decide everything up to the limits of what an
TV can actually play, which is much higher than what you can get via iTunes.
iTunes brings convenience, smaller files and the iCloud locker benefit. However, the tradeoff is Apple deciding on factors like picture quality to achieve compact file sizes. Make your own and you decide.