Apple TV quality, not up to snuff?

I first covered this when PowerPage contributor and video professional Rob Parker noticed the Apple TV's poor quality video after seeing it on display at his local Apple store. He observed an "insane level of graining" and "compression artifacts" calling it "simply a wretched combination."

After watching some downloaded television programs on my Apple TV this weekend I'm not about to go that far, but agree that the quality level falls short of expectation. And I'm not the only one. 

The Associated Press' Peter Svensson takes Apple to task saying that the Apple TV "comes up very short" and that videos from the iTunes store "look horrible on an HDTV set" and panning movies and TV shows "same nominal resolution as DVDs." He takes it up a notch saying that "it's as if Apple had launched an iPod that sounded like a cassette player" and "Apple TV's shortcomings make the Xbox 360 a better choice." Ouch.

In his comparison between Apple TV and Xbox 360 he concedes that the Xbox interface is "garish and confusing" but goes on to say that Microsoft's Xbox Live marketplace "has some movies in HD, and these look absolutely stunning - better than most broadcast HD, and almost indistinguishable from HD DVD or Blu-ray discs."

I haven't purchased enough TV or movie content from the iTunes Store to make a proper judgment yet (although 'Pirates is on tap for tonight) but I'm curious about your impressions here. On an objective basis, how would you rate the Apple TV video quality? Is it up to your standards?

I think that Apple is going to have to add a whole bunch of High Definition content before Apple TV is going to get any traction in the market.