Apple TV: YouTube not ready for the big screen

I have to admit, this past weekend was my first hands on experience with Apple TV outside of it's debut at Macworld. I was impressed with it's photo 'screen saver' mode when idle, it really set my brother's living room off nicely.

As I was exploring the Apple TV I went to it's native integration with YouTube to see how it handled streaming content from WiFi. I decided it was appropriate to test the Apple product with a favorite video of mine: Mac Vs. PC Rap, from Pantless Knights Productions. I was impressed with the streaming, but not so much with the video quality.

My brother has about a 40" TV. It isn't the largest you can get, but by no means is it small. YouTube looks decent on the computer, but it does not make the transition to the big screen very well. All I can say is pixelated. It serves its purpose, but don't expect a crystal clear viewing experience.