Is apple tv what I need?

I'll start by explaining what I have and want to know if Apple TV can replace this:
There's an older PC connected to my LCD TV with just enough power to play HD video. This PC runs Linux and Elisa (very similar to front row). It also runs mt-daapd (opensource on demand music streaming for iTunes). Another thing which is very important is it's always on and used for leeching from torrents. The torrent software I prefer to use is mldonkey. There's a 1TB external hard drive connected to it which is shared over the network, it's important that this is connected here as the PC is always on.

Can I replace this setup with Apple TV?

I don't know anyone who owns this thing, If I did I'd borrow it to try it out. Does anyone have a similar setup to this with Apple TV? I don't care if it involves hacking the thing.

I wouldn't buy it to use it for the purpose it's marketed for. It's useless to me for this as iTunes is not available where I live.

Note: I'm not talking about running Linux on it, just asking if it will serve the purpose with the os and software it already has with some additional tweaks.

I got one recently myself and have experimented greatly with a few things. First off, it's very easy to add additional functionality using an installer you put on a USB thumb drive (called a Patchstick). It lets you add two services called Boxee and XMBC, as well as an SSH server. Boxee lets you access their own service to download videos hosted by them as well as navigate the drive and run any video file on there provided you've supplied the necessary codec. What most people do is use an SFTP client to log into the Apple TV after creating the SSH server and manually install Perian. Once done, you can play most anything. The patchstick is supposed to be 100% legal, and a commercial version is available that allows for extensive customization of what you can install. The great thing about the patchstick is that you don't have to remove the hard drive to mount on and modify using another Mac, and thus void your warranty like previous hacks required. Oh... and yes, you can enable access to a connected USB drive also with the patchstick.

So the downside? This thing is really underpowered. I can tell you that MKV videos in 720p will be unwatchable. Forget watching any HD video in 1080i/p. I've converted MKV videos in 720p to MP4 using Handbrake's default settings for Apple TV and gotten satisfactory results that way.

I'm not clear on what you meant by wanting to use it to leech torrents. Do you want a torrent client running ON the Apple TV downloading files? Actually Boxee will be able to do this. Read link below for more details on Boxee.
Gizmodo - How To: Max Out Apple TV's Potential With Boxee - Boxee on apple tv guide

Thanks dude. Yes I've used both Boxee and XMBC on my current setup but kinda stuck with elisa which is pretty much the same and less resource hungry. Anyway you answered my questions.
Just to be clear about the torrents I meant torrent client. Yes, running on the actual Apple TV. I use mldonkey for that mostly, kinda stuck with it from the old days when edonkey ruled too.
Anyway the Apple TV sounds like a nice budget solution. Not that you can't buy something 3 times as powerful for the money, but still... size matters here.
I think I'll convince my dad to give me his old mac mini, at least I can hope for 1080p with that.

I liked the Apple TV for its low profile and lack of DVD drive. I was shocked over how underpowered it was though, and how little RAM it has. Even the internal drive is an EIDE, not SATA. I was considering installing full OS X on it, but I'm not even bothering now. In all honesty, given all the limitations the ATV has, I'd rather have just gone with the Mac Mini.

Even for a buyer who actually does favor an ATV, this isnt the right time, if one can wait.

With WWDC around the corner, I'm sure we will see updates to the long neglected ATV.