It doesn't make any sense for Apple to abandon the Apple TV. If people want to stream their iTunes video form their computer to their TV, it makes much more sense to spend $230 on a TV-optimized device than $600+ on a general purpose computer that doesn't even have HDMI or component outputs.
I'd much prefer to use a mini as my media-extender than the Apple TV. More powerful, and easier to customise/add functionality. The lack of HDMI/components is the one big drawback, though many HDTVs these days feature some kind of PC input so it may not matter that much.