I'm trying to encode movies using HandBrake for the best playback on all three devices (iTunes on a Mac). I want to do so with the AC3 audio so a $1,000 sound system isn't wasted on plain stereo audio tracks. I experimented with this first using The Mask of Zorro. It plays back fine on iTunes, works on my iPhone, but the ATV just sits there and stares at me when I try to play it back. As best I can recall, I encode at 960kbps, h.264, AC3+Surround audio, 640 pixel width, .m4v extension. So if anybody knows the sweet spot for all three methods of playback, I'd LOVE to hear it. I dream for the day when we can import movies like we do audio. I dream for a day that will never happen, I know.