It scales to the largest size that fits both dimensions, so you'll have black bars on the left and right.So: How does the Apple TV display non-widescreen photos? Does it show all of the photo (with black bars either side), or zoom in cropping the top and bottom?
No, it's one size fits all. However, you can turn on the Ken Burns effects (auto panning and zooming) in the slideshow preferences.In fact, can you zoom in using the remote control?
Probably, but I have not seen an official source.I think those pictures are simply scaled to fit 1080 but they don't necessarly have the resolution.