Honestly AirVideo is amazing. You can barely tell the difference if you have the bit rate cranked up. I plan on getting a projector one day and that's the main reason I stick with uncompressed rips. Maybe AirVideo will surprise me even more when I get that projector..but if it doesn't, at least I will have the uncompressed rips ready to go..
New version (Air Video HD) and the beta version of Air Video will stream h.264 without any conversion of the video at all. They basically do what products like MKV Tools do - redo the audio and put in an iTunes compatible container. The new version will also convert and download to your iPhone/Pad.
So anyway, I took an episode of That 70s Show and ripped it with MakeMKV. Came to 5.88 GB for a 22:30 episode, so a two-hour movie at that bit rate would be about 31.3 GB. The audio is DTS-HD.
Its not stuttering, but it is stopping about once per minute for a few seconds when streamed to the Apple TV. Playing back on the iPhone it doesnt pause - although its a bit ludicrous to play 31 Mb/s video on a 4 inch screen.
So we can handle one uncompressed stream (Mac to Phone via Air Video Server) but not quite two (iPhone to Apple TV)
I then converted it to MP4 with MKV tools - video left untouched, audio converted to AAC and brought it into iTunes. Lots of buffering issues, despite it only needing one stream, from the Mac where it was located, to the Apple TV.