Max resolution and format for Apple TV from imovie and itunes

I use iMovie '09 to make movies from my HD 1920x1080P camera that I SHARE to mobile me, itunes and for use on Apple TV via itunes.
I am trying to figure out the max resolutions and formats.
If I SHARE from imovie with 960x540 it goes right into itunes and shows as an HD movie on the Apple TV
If i export from imovie in 1280x720p i can drag into and play from itunes however it doesnt show up on the Apple TV? i thought the apple TV supported 720p? is the format wrong? when you export it comes out as .mov and when you SHARE it comes out as .mp4?

I have been struggling with this for some time. We have great HD cameras, and fairly capable consumer grade video editing capability with iMovie; but we have limited HD viewing opportunities other than a computer.
Apple TV does play it in 720p provided you meet the specs below - perhaps your 720p movie exceeded these specs. You see, there is 720p, and then there is 720p with serious Mbps.
At least for me, when I export at 720p @ 5Mbps the viewing is jittery and not smooth. I guess it is too much processing, although it seems to work fine when it is a downloaded movie in HD, just not an iMovie production.
So, I just use the 960x540, which is clear and smooth, and wait for the day an improved Apple TV hits the market with the processing power to smoothly handle 720p and beyond. I have a big (100") screen, so I can use all the resolution I can get to keep that large of an image sharp.
The alternative is to use a Mac mini and route through HDMI to your TV. That does a good job but is more expensive (triple) the ATV.
Video formats supported:
H.264
up to 5 Mbps, Progressive Main Profile (CAVLC) with AAC-LC audio up to 160 Kbps (maximum resolution 1280x720 @ 24fps, 960x540 @ 30fps) in .m4v, .mp4, and .mov file formats
MPEG 4:
• up to 3 Mbps, Simple Profile with AAC-LC audio up to 160 Kbps (maximum resolution 720x432 @ 30 fps) in .m4v, .mp4, and .mov file format

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