I got Apple TV 6.0 to work by doing this...

So I tried the update and got the connect to iTunes loop of death also.  After a number of seemingly pointless iterations to get it out of that... I finally got it to work by going to Download iTunes Now and getting the latest revision of iTunes 11.1  (126).
Even though I already had iTunes 11.1, it was not the (126) version.  So once that was installed, I tried the recovery install again, and this time it went through.
Universal fix?  I don't know, but I'm sure everyone looking for a way to make their perfectly fine AppleTV useful again wouldnt hurt to check if that fixes it.
Good luck.

Also, w.r.t. the microusb cable,  I used one i had lying around from an android phone, just make sure iTunes maintains the connection with it (mine seemed like it was dropping connection with iTunes...but I think that was because it was a tight fit with both usb and hdmi in at the same time (all the extra rubber gripping). Anyway,  this may mean disconnecting the HDMI cable (since I couldnt keep both in at the same time). and reconecting it once itunes finishes it's business.
And hopefully you will see that silver apple looking at you when you plug it back in.

P.S. Please let others know if it works for you or not by replying in this thread.

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