10-14-2007, 01:21 PM
Playback quality is dependant of the source. If you use a decoder to rip movies (and do so in the highest level for an Apple tv) they look DVD quality.
You can't use the Apple tv USB for anything but diagnostics. That being said you can turn off the option in iTunes to import files when adding to your library (in essence creating a shortcut) and drag the files you want to sync from your external drive on your network to iTunes.
Not sure about .avi files I think only h.264.
Apple tv does not record tv. You can take files from a Tivo and add it to iTunes and then watch it on Apple tv but there is no ability to use your Apple tv as a DVR.
Think of an Apple tv like an iPod for your TV.
My wife picked one up for me erlier this month and I ended up taking it back (and paying th $40 restocking fee) not becuase I didn't like it, just in case Uncle Steve announces a new version later this month.
I'll pick another one up regardless the same time I pick up Leapord.
Hope that helps.