Unfortunately the ATV is too under powered to provide that level of quality — see Apple’s own specs for maximum resolution and bit-rate.

I doubt it makes that much of a difference though, in my opinion Apple should stay focused on offering the best selection, and in the future try to loosen up the DRM so you can also watch the movies on your PC/iPod.

I always download my movies hours or days in advance anyway, so I wouldn’t mind the wait at all. My HDTV is only 720p, though, so I wouldn’t benefit from the increased resolution, but I would love less compression.

Yes Yes Yes – that is if a 1080i TV can display it! Are they rentals only, or can you purchase these titles?

I’ve all but given up on Apple TV rentals due to the quality, instead opting for Blu-Ray rentals from Netflix. Even with a 3-4 hour wait, I would definitely reconsider Apple TV rentals, especially if you can queue them up online from any computer the way you can with VUDU.

It still amazes me that that the ATV gets so much criticism for not being full HD. I don’t use one simply because I purchased the Mac Mini instead which does support full HD and has all the computer power of Leopard and Windows XP. Remember that they are dual boot!!! I have downloaded from the Itunes store and have compared like scenes on many videos to find very pleasing results on apples compression format (H.264) compared to DVD titles. This result alone drove me to convert 300 of my 500 DVD’s to H.264 format, .MV4 files for Apple TV, so that I could watch what I wanted, when I wanted instantly. I have 2 Sony 400 disk carosels and love the quality of the picture but absolutely hate the wait time to find the disk I want, press play and wait for the menu to finally arrive to begin playing the movie. It can take up to 3:30 seconds or more if the unit was turned of. My Mac Mini gets the movie I want, All apphabetiezed in Front Row, in about 10 seconds. Lets face it, it comes down to time for me, not so much as quality. If I do want to have the ultimate quality, I can put the new Panasonic superdrive into it and have the ultimate media center that is only 6x6x2″ setting on my cabinet. Also the Mac Mini can share files and media with my Mac Pro to take some of the burden off of the hard drive, all wirelessly. I think the Vudu will intrigue many customers, but without having a standard video compression technology it may become another brick.