IPhone 4S, AirPlay, and Apple TV conundrum

So, the 4S records 1080p HD video, and you can stream these over AirPlay to your HD TV via Apple TV - but Apple TV only does 720p.
Am I missing something here or does this mean that ATV will down-scale your 1080p videos to 720p (and then display them on your 1080p TV) or does it mean Apple will be releasing either a new ATV that supports 1080p, or a firmware upgrade so the current generation ATV can do 1080p?

jakesthememan wrote:
Ok i found the info. The second generation apple tv will support 1080p HD streamng Via airplay after being updated to 5.0
Thank you. So ATV runs iOS? I didn't realize that (I don't have one, but will get one when I get a 4S).

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