mgnz:numfarr:chevrolux: Apple TV2 jail broken with XBMC.
No 1080p output with the ATV2 though, and no sign of a jailbreak for the ATV3.
Personally I have had it with media players and their PITA closed firmware that never quite does what you want. I would (and indeed just did) stretch the budget and get an HTPC: you can get a case, i3, motherboard and RAM for about $375 now that will play anything with no firmware and codec worries and a wide choice of user interfaces, operating systems, and accessories. Add an 802.11n USB for $25. OK, it won't be as compact, but does it really matter?
I'm dubious you can build a decent htpc this cheap.
It only cost me $99 (delivered) for the case because I had parts left over from another upgrade, but the equivalent parts with current prices from Pricespy are:






Motherboard chosen at random, I don't know if it is particularly good for an HTPC but it's roughly the equivalent of the EVGA H55V that I used.
You can run XBMCbuntu from a $10 thumb drive, or add a hard disk if you want local storage.
With the Intel stock cooler and just the built-in case fans this is very quiet. I haven't measured it but it's quieter than the media player it replaced, and much quieter than an Xbox 360.
Oh and I spent $10 more for this remote control, which works OK with the Logitech Harmony, although you can just use an iPhone or Android remote control app.