XBMC just released the first update for AppleTV2 and iPhone/iPad port of its excellent software. The Changelog includes following:
- GUI speedup
- Webserver enabled
- RTMP support
- AC3/DTS Audio Dialogs
- Rotating for the iPhone and iPad
- Black and Dim screensavers working
- Bluetooth Support
- SMB shares with Windows Live Essentials should work.
- Sleep timer works
- Add-on updates now working
- Decrypted ISO playback works
- Thumbnail creation fixed
To get that upgrade on your AppleTV2 just run following commands in the console:
apt-get update && apt-get install org.xbmc.xbmc-atv2
Also the question about output 1080p video was clarified. XBMC can decode 1080p video. But AppleTV2 has either hardware or software restrictions to 720p only.