It sounds like your TV has blue, red and green (i.e. RGB) inputs - which are not suitable for the Apple TV 🙁
I don't think my TV will support it, which is one reason I have resisted buying an Apple TV so far 😉
As to the quality of your existing videos for your iPod, if you get the Apple TV working, try them! I do know that some people rip things twice - a top quality file for the Apple TV (which will be slower to encode), and a smaller file with a suitable resolution for their iPod (much quicker to encode).