I appreciate the help but I have just resigned myself to not being able to get it to work.
I live in a 150 year old house with very thick walls on a busy street where you pick up about 50 wireless networks whenever you scan. I have tried AirPlay from my iPhone, iPad, and MacBook to my Apple TV and airport expresses and they all cut out.
I spent three hours on the phone to AppleCare and we eventually concluded that the problem was wireless interference. My router is a time capsule so I don't think the problem is going to be because of a crappy router. My ATV is not jailbroken, and the only files I play are iTunes music files (video just doesn't work at all).
To give you an idea of how badly the connection suffers because of all the interference my internet connection is 50Mb, and I achieve this with over ethernet, but as soon as I go 25ft to another room the wireless speed drops, often below 1Mb.