Thanks Drabbit.
My goal is to rid myself of a extremely expensive DSL/Sat TV/home phone combo package which has crept up in price to $132/month, an incredible sum. I have a HDTV with 16x9 format and a TiVO like device recording content from Sat. I have witnessed the AppleTV quality and although not impressed with it displayed over TV, over Mac its not so bad.
My biggest issue is my 6yo girl loves cartoons. Because her mom doesn't have cable, my 6yo enjoys time in her own room watching her own TV and choosing her own content.
Don't over complicate the configuration. I will present what I did to eliminate the Satellite system and to just receive over-the-air broadcasts, record them and present them via iTunes and an iPod to the TV.
I started out with the iPod system as the only mechanism to store iTunes videos and play them on the TV. This was easy. The iPod has a video out, but you have to swap the red and yellow for standard (sony) video cables. Or, you can get the Apple cables for less than $15 these days. With an iPod, I have my desktop mac as the repository of all the audio and video. For our 2yr old we bought spongebob and mickymouse club but that's it. I realized that he liked watching bob the builder, caillou, etc from the pbs stations that we were getting over the air. So, guess what, I ditched the satellite system and was only watching the 18 channels over the air. Fine, too because we really watch network tv for the most part. (btw, I really miss the espn stuff, but free tv is free tv).
As an upgrade, I bought the hdhomerun from elgato and it comes with a 2 user license for EyeTv. Now, EyeTv allows recording over-the-air (even from satellite and cable programming) and permits conversion to any format that quicktime can handle (that's iPod, AppleTV, etc). Additionally, you can edit out commercials trivially.
So for all the cartoons, provided by the kid's channel on pbs, I edit out the commercials, then conver them to the iPod format. For play back the picture quality is nearly perfect, as far as I can tell. Since, all the cartoons are in 4:3 layout, there is no need to use the Appletv conversion. The core compression is the same.
I have a mac mini attached to my hdtv via an hdmi cable, and the mini can play back the eyetv recordings from their raw mpeg2 TS state. This means I can watch the recording at full HD quality. But, what I realized is that the quality of the Appletv video is just as nice. For instance, I converted some of the eyetv hd recordings to Appletv, and while the quality lower, it is still very high quality. I didn't find it distracting at all. As I said earlier, for the 4:3 shows, you cannot see any quality degredation. BTW, the size of Appletv files is about 1/8 of the HD format (HD mpeg2 is 9G/hr); especially when you remove the commercials (20 minutes for an hour program).
Since, the Appletv video format is very good, I am thinking that the mini as a video play back device, attached to the tv, is just overkill. I would rather have that on a desktop as another fully functional computer. And, I am thinking that the Appletv will replace it as the playback device.
Because my video collection is quite large, I have a large 1T disk to store it on my desktop. For me, I only care that the Appletv streams the data over the wire for play back; that's what prompted me to visit this forum -- to find the answer to that.
On a side note, my HDTV is the Sony 34" crt, and as we know tubes are not being made any more. Pitty, because, they are unmatched for video play back. LCD's are great for text, but suck for video. I hooked up an old 19" crt to the mac mini and played back some video; wow, it really looked stunning and matched the 34" crt quality. On my lcd monitor, it looks ok but not stunning; even with a 2ms refresh rate the lcd's still suffer from shutter hold which visually blurs motion; similar to the blur caused by 24 fps in movies and most primetime sitcoms and dramas.
John