Apple HD movies are flawless, all I want to do is play HD movies that ive downloaded in the same way, but dont seem to be able to. The pic quality of the movies encoded with HB are good, but like you say there are still visual issues. Maybe when i fit the broadcom HD thing, i will then have no problems and I can give encoding a miss, especially that its supposed to let ATV play 1080p movies??
I hadn't read about the Broadcom device. It sounds interesting from what I've read, but it presents a couple of issues. One is that you'd then have to get a different Wi-Fi card (USB, I suppose) and your ATV would then be completely dependent upon hacks to function into the future as the USB port wouldn't function without them (unless you use Ethernet of course).
The other issue is that you're stuck with XBMC for playback. This presents two basic problems. One is that you can no longer use a unified interface for keeping track of all your media (unless you only use XBMC).
The other issue is that XBMC has very poor M4V/Tagging/Feature support, which leads back to my primary reason for not wanting to use it for more media. Basically, it has no chapter support for M4V files (I don't know why since clearly the information is available as Handbrake does make good use of it for encoding) and frankly having to fast forward through a movie or video is so archaic and annoying for those times when you really want to easily navigate. Oddly, it does support it for MKV, which once again suggests anti-ATV or perhaps rather anti-M4v/Apple sentiment or lack of caring.
Worse yet, is how XBMC completely ignores tagging for movies and the like. It seems completely counterproductive to me to try and "guess" information based on a file name (nearly 100% wrong for foreign and b-movie films and often shows "incorrect" results rather than admitting it has no clue) when that information is neatly stored inside the file tags itself. I didn't spend all that time tagging my movies with MetaX for XBMC to just butcher the database with incorrect "guessing" and taking forever to look it all up the first time as well. I realize it's a free product, but I'm simply stating why I don't use for much other than as a means for parental type controls for more adult themed movies and the like (I have no idea why iTunes/ATV lacks these basic controls with a simple tag + password lock system). I've also seen some M4V movies simply fail to play for reasons unknown. I could have sworn it used to have network password controls on it (sometimes OSX locks out files that somehow have gotten the wrong permissions set on them which is a PITA to fix with huge sets of folders of photos, etc.). I can go through with the picture viewer and it will simply refuse to display certain pictures in a given directory. XBMC also will not pass-through DTS music files to toslink connector, at least not without jumping through some hoops (The Apple TV interface passes through my Apple Losslessly compressed files without even trying or having to relabel (calling a file .dts will result in loss of playback in iTunes) or somehow index them with extra files that are a PITA to set up for every track). Basically, I appreciate the idea of XBMC, but I don't really much care for the interface or features of it, save the weather data and visualizer (seeing as ATV *still* lacks one for reasons completely beyond me; if my G4 PowerMac can handle them without any trouble, it surely ought to be able to). Note that these are not meant to be complaints to the XBMC developers since it's a free/open program, but rather simply represent the reasons I rarely use it.
I'm glad to hear some HB developers do like Apple TV, but I did say "seem" above as that's simply how it comes across when things like "M4V" extensions disappear or default settings don't handle 720P files very well for some files. In fact, DVDs used to look terrible too with the preset until I discovered the comb filter (otherwise it's just horrible with some media). Comb never seemed to hurt any of my 300+ DVDs, so I could never understand it being disabled by default when the default looked so darn awful with so many titles. I did create many of my own settings for various situations and they mostly work well, but sometimes a movie like Star Trek VI just seem impossible to get perfectly smooth without negatively affecting the video quality and since it takes many hours to convert even once to find out and then test, etc., I'm not fond of fiddling with controls for long periods of time as one movie can easily lead into days of testing. Apple TV's limitations are well known so it just seemed like it should have been easier to find a setting that didn't cause hiccups. I still have no idea how to get rid of the panning/glitch issues with "video" type DVD sources. Comb filtering doesn't work for that particular type of motion distortion, etc. and several presets and manual setting attempts later not leading to smooth results, I basically gave up and simply let things like the Red Dwarf spaceship move a little choppy (it doesn't do this in all scenes, though, just large panning ones and this never happens with movie sources so I assume it has something to do with video; turning off comb filtering results in interlacing tearing).
I do know one thing and that's after spending the past year converting all this media, I'm completely sick of the process (and so even IF I could find an improved setting, I would not really want to go back and redo the entire library, maybe a few titles at most). Converting and tagging over 300 DVDs isn't a lot of fun and converting VHS tapes, etc. is even less so (and even Final Cut Pro + Quicktime or Compressor is slow as molasses for converting to M4V compared to Handbrake. It's another reason I'm glad the new 3rd generation iPhone and iPod Touch can scale video in real time (i.e. all my movies optimized for highest resolution and Apple TV will play just fine now on 3rd generation unit whereas they won't play at all on my 1st generation iPod Touch). Having to convert something to view it on another medium sucks. This is why I would have preferred 1080p from the get-go on AppleTV at least for conversions since I don't really want to do it all over again at some point in the future and I don't want to go back watching a movie off a disc format...EVER.