Can Apple TV 2 stream purchased videos / home movies converted to MP4 and in my iTunes library?

Okay, so we currently own a 1st Gen ATV and love it, however 99% of it's use is streaming purchased content and/or home movies etc. that I've used visualhub/handbrake to convert and imported into my iTunes library. All in all, once I gave up and surrendered my video content to iTunes and started streaming to my 1st Gen ATV I've grown hooked, I love sorting stuff however I want (I have about 250 movies, entire seasons of X-Files etc. that I've ripped from my own (LEGAL) media and put in iTunes, so when it's sorted properly it's very clean, when it's all alpha, it's a nightmare.
I've tried a few media servers for the PS3, however they just pile all the movies into one big alpha sorted mess, music isn't sorted by genre, no genius, TV shows are not tagged by watched, won't resume properly etc. Boxee / XBMC are a little better, but then again I run those on my ATV as well, and still Boxee doesn't really seem to sort stuff quite as well or play playlists properly.
We're getting another TV for our den and have been looking into other media streaming options, what I love about the Apple TV is the way I can sort all our movies, shows etc. by genre, so the kids can just go to the stuff I've tagged as Kids Movies or I can make video playlists for them and mix up some Planet Earth and Dora the Explorer for our babysitter and movies /shows are tagged as watched/unwatched, if you stop one it will ask if you want to resume, etc.
Looking into the ATV2 it seems like it's just geared for rentals, If that's the case I really am not interested. I like the Netflix option, but then again most newer internet connected TVs do that as well as my PS3, not sure how viable an option the WD TV Live plus or Boxee box is, I'd like to get some newer hardware, but I'm just not sure what route to go.
Does the ATV2 stream media in iTunes TV Shows/Podcasts/Movies folders? It doesn't sync right? So it it all Airplay now?
Is my best bet just to get another 1st Gen? Are there any other media servers that are able to sort stuff by played/genre/etc.
Ug, I'm at a loss! I really love the features of my old Apple TV, and would love to get a new one, but I'm just not sure if it will do everything I'm used to, or if any of the other standalone boxes are better options?
I know this is a bit of a ramble, hopefully someone can make enough sense out of where I'm going and help me out! Thanks!

Welcome to the Apple Community.
The Apple TV 2 will play all the content in your iTunes library that your Apple TV 1 does. It can no longer sync any of it but can stream it all just as the older model did. Airplay is a different feature that lets you stream from an iPad/iPhone, the Apple TV 2 has Airplay the first didn't.
You can still sort and search content by genre, it still marks content watched and unwatched and mainly still lets you organise much as the Apple TV 1 did, with one exception. It doesn't do nested folders, so the ability to tag a movie as a show (ie James Bond) and have all the associated movies in a James bond folder has gone and it lists all these movies individually.
It has a similar situation with TV shows. It will put all TV shows in a series in a folder as the older one did, but the new one lists each series separately whereas the older model would put all the series in one folder.
Not nesting folders is a bit of a pain with large libraries and whilst I don't like it, it's more or less the only compromise I have to make and of course I get additional features too.

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