Apple TV & Mid 2012 Macbook Air 11.6'' - AirPlay not working

So I just purchased the new MBA to replace my 2010 air...which also suffers from a cracked screen. Since mirroring wont work on the old model anyways, I sold the unit and cut my loses (I was going to replace to LCD but decided it wasn't worth the effort.)
Anyways...
I attempted to use the MBA and the mirroring function out of the box and it worked great. Sure the mouse was a little sluggish, and the audio obviously delayed (on the MBA), but synced perfectly to the TV. I watched YouTube videos, and some other flash and HTML5 embeded content. I was prompted for an update for my Apple TV 3, and today for my MBA. After updating, and restarting both units (which I have done several times since then too), mirroring does not work as it should.
When I select the TV usually it would adjust to a resolution higher than the MBA native resolution--but appropriate for the TV. Instead, the MBA screen goes blue, adjusts to the resolution, and then goes blue again, returning to a non mirroring mode.
Sometimes when I do get mirroring to work--at the MBAs standard resolution--AirPlay will be "working" despite it saying that mirroring is off and greyed out.
The biggest frustration out of all of this is that whenever I go to play a video, assuming AirPlay doesn't stop mirroring at whatever random resolution it picks (I have adjusted between a fixed and aspect appropriate setting), the AUDIO will only play through my televisions speakers, and the video will stop feeding and go back to the Apple TV home screen.
It has done this with YouTube, HBOGO, Hulu, and a number of other video streams online.
Has anyone else had this issue so far?
To reiterate:
Using mid 2012 MBA on OSX Mountain Lion
Apple TV 3 will stream audio and mirror sometimes, but stops mirroring whenever video is played.
AirPlay icon will remain available, but will say mirroring is unavailable / greyed despite it actually "working."

Hey thellamaPod,
Thanks for the question. The following resource provides troubleshooting information for AirPlay Mirroring in OS X. Usually, this may be caused by the firewall and a simple tweak of the settings should resolve your issue:
About AirPlay Mirroring in OS X
http://support.apple.com/kb/HT5404
Firewall security settings
If you use a firewall, make sure the following firewall security options have been set to allow AirPlay Mirroring to work:
1. Choose System Preferences from the Apple menu ().
2. Click Security & Privacy, then click Firewall.
3. Click the lock icon to unlock it if it's locked, then type an administrator name and password.
4. Click Firewall Options.
5. Deselect (uncheck) the “Block all incoming connections” checkbox.
6. Select (check) the “Automatically allow signed software to receive incoming connections” checkbox.
Thanks,
Matt M.

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