I don't see them offering the full range of television screen sizes, just the ones that they've tested and feel are the perfect size. There's a reason the iPhone is 3.5", the iPad is around 10", and iMacs come in 21.5" and 27". Maybe they would just say a 50" TV is ideal and be done with it.
I think that's the fundamental problem with the concept. Unlike iPhones, iPads, and iMacs, unless Apple adds something exclusive to their television (beyond an Apple logo and a "it's so thin" shell), I don't see it selling that well. People live with 3.5" screen iPhones even when they want some other size because of the rest of the benefits that makes them willing to compromise on that one. With a TV, Apple would need a collection of other benefits to distinguish it from other TVs to make an buyer's decision about screen size be worth the compromise for those that would prefer some other size (than what Apple would choose).
How do that do that with iPhones, iPads, and iMacs? Lots of software benefits that are largely exclusive to those devices. Can they do that with their own television? Maybe, but then they would probably have to kill the

TV as it's own little box and build it exclusively into their branded TV. Then, like iPhones, iMacs, iPads, they'll have unique Apple software delivering some great user experience for (their) TV buyers.
I just don't see them killing the

TV box though. If I'm right about that, then all of the same software benefits would still be available on ANY television. If we could run iOS or OS X as fully and completely in an Apple-endorsed way on other hardware, I wonder if that would still make iPhones, iPads and iMacs so popular? This would be like that.
In other words, Apple deciding on screen sizes, etc for their customers in this device but still making the software side readily available to other televisions of other sizes, etc would- IMO- make the appeal of the Apple set much less. This is especially true if by sticking an Apple logo on someone else's panel, they also plug in the usual Apple margin. Let say they source their panel from LG. I would forsee the proposition being to buy the new Apple television for- say $2000 or buy the exact same panel in one branded LG for $1400. The Apple version comes with the next-generation OS & UI for

TV or for $100 or so more you can attach a set-top box to that LG set and get the very same OS & UI. Net result is an identical experience for $500 less.
I think what allows Apple to get away with their margins is the complete ownership of hardware + software. If they split those out as it would appear it would be in this case, it's hard to imagine it selling that well to anyone other than those who are already sold on the exact hardware choices that Apple has made for them (stuff like that particular size, LED vs. LCD vs. Plasma, etc). Because of this, I don't believe the rumor of an Apple-branded television. But if there is one, I suspect the

TV set-top box would have to be the casualty so that it can be the software hooks to help buyers justify the hardware compromises Apple chose for them.
----------
While 1080p is a nice idea - the real problem is bandwidth caps that many ISPs have in place - you could hit the cap; and if Apple TV proves popular it will add a large load on the network, and of course current mac users would be d/l as well and assign to the network load
But that's the case with 720p as well. It would be more efficient from a bandwidth perspective if we all went back to SD quality. Those files are smaller and burn less bandwidth.
And it would be even more efficient it we went back to VHS quality or even 320x200 video, as that would yield even smaller files and burn even less bandwidth.
It's certainly true that 1080p will tax bandwidth more than 720p as 720p taxes it more than SD. But rather than allowing that to be justification of why 720p or SD is good enough, it can instead be seen as a problem to be solved. Once, the biggest hard drives were 65Mb (yes Mb). But as storage demands have grown and grown, so solutions to limits have been innovated. If the world wants to pull more data through the Internet, the pipe expansion innovations will be necessary. That's going to happen anyway- whether 1080p is embraced or not- it's just progress.
On a personal scale, those dealing with ISP bandwidth caps and costs would still be able to do what those facing the same issues with 720p downloads now do: choose smaller options. If 1080p files are added to the iTunes store, I'm confident 720p and SD options will remain there too. For those with bandwidth concerns such that they are willing to compromise on resolution maximums, they just choose the 720p or SD version... exactly as they do now.