Movies play in low resolution ... ?

Just got the ATV2, and set it up. Movies stored in iTunes on the iMac upstairs were listed and played just fine, but noticed that the resolution of the movie itself was very low. I started off playing some of the Pixar animation movies and saw noticeable compression in the graphics, color was off, etc. Even the kids asked, "why is the movie so fuzzy?" Almost as if the quality of the movie was significantly downgraded to optimize streaming over Wi-Fi.
Anyone else experience this?

Just received ATV2 and rented The Spy Next Door (in HD). I have to say I was very disappointed to see quite a few artifacts and excessive graininess. My LCD is full 1080p and relatively new so I know it ain't the TV. (I know the ATV2 is 720p). I have 8Mbit DSL - a quick sniff indicated movie was streaming at about 3Mbs - so not a b/w issue and indeed if I paused the movies I could see the buffered stream was quite far ahead compared where I was in the movie (if you get me).
Curiously when I previewed whats on In The Theaters - the promos were free of any noise / artifacts.
Hope this issue related to that particular rented title only. If other titles suffer same then ATV2 is going back.

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