I recently decided to buy an Apple TV to use together with my LCD projector. I had gotten tired of using my laptop as the playback device since I always had to move cables around. Thought it would be good to have everything permanently setup for once. Earlier I had some doubts about the Apple TV since it is a bit crippled compared to other solutions out there including using an old Xbox with the hacked media center application. But buying something from Microsoft to my home seemed a little bit too much for a Mac-person like me. The main drawback of the Apple TV is of course the limited set of codecs it supports. However, that turned out to not be a big factor when I discovered VisualHub which is a great media transcoding application. It eats a lot of useful formats and has presets for converting to the Apple TV or an iPod and even adds the content to the iTunes library. So when everything is converted it is automagically synched to the harddrive of my Apple TV and is ready to watch.
The image quality is great even on my big screen. I use component cables now and the 720p PAL resolution and for HD-encoded clips it looks just great. The interface is very good looking and it show it comes from Apple which I really like. The recent updates also adds content from YouTube and it also works just fine. Even there the image quality surprised me. Not as good as the HD-clips I have of course but not that much worse than standard resolution TV sometimes.