vahtryn, DVDs are 480p… the video downloads from iTunes are close to that, too. (640 x 480) Apple TV can natively output up to 720p, one of the HDTV standards.
The formats supported are: H.264 and protected H.264: 640 by 480, 30 fps, LC version of Baseline Profile; 320 by 240, 30 fps, Baseline profile up to Level 1.3; 1280 by 720, 24 fps, Progressive Main Profile. MPEG-4: 640 by 480, 30 fps, Simple Profile.
I was told it only supports 2-channel audio, but maybe they were wrong.
Purchased content may require iTunes 7. I don’t think Firefly is going to support Fairplay DRM anytime soon. Ron? 8)
Transcoding “live” to H.264 or MPEG-4 will take quite a bit of horsepower.
My contact at Apple says this isn’t going to be as easy as some might think. (Apple TV vs. Firefly… or any other DAAP implementation.) We’ll see if he’s right…