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hey man, don't worry, using the optimized settings should make most files more than playable and there will be better versions of XBMC in the future which hopefully some day can use the GPU, so hang in there and enjoy your ATV :-)
I'm enjoying mine a lot and I love the HD rentals in the apple store, really awesome quality!
best,
randy.
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What settings for something like Handbrake would people recommend to generate 720P files for use with the Atv ?
Thanks,
Roy.
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FWIW, I do encode BD disks and I get as much as a 50% savings in size by doing so. The files start out 1080 and that's the way I leave them, they look great! I am also not about to convert my extensive collection to BD but as I get new movies I like the higher definition. For downloaded stuff I too stick to 720P in MKV containers. Sadly my aTV struggles just a little bit on those, I've not tried a 1080 file - I can imagine the carnage!
So yeah, some of us do want to watch the higher def stuff from BD disks <shrug>
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As far as I've read and tested, Apple TV can handle up to 5Mbps, but performance on XBMC is not as good since the CPU needs to do all the decoding and played natively on Apple TV through Quicktime it has the GPU to help, which helps a lot since the CPU is pretty slow (compared to today's standards) but the GPU is strong. Bad for XBMC though :-(
Randy.