Now I have privacy concerns with ATV2

After last night's epic failure of the ATV system, what we have learned is that every single video you play on an ATV2 has to be authorized by apple servers.
I understand it if the video has Apple's fairplay DRM, but much of the video I have in itunes is my personal video or DVDs i ripped with handbrake.
Last night Apple's servers were down and anybody who owned an ATV2 could not play any videos.
So keep in mind they have to authorize every video you play, and if their servers are down like they were last night, you can't play ANYTHING...

Gosh
I hope that's not true.
Am I correct in thinking you're saying that this outage prevented you streaming unprotected content to AppleTV?
DRM is a pain in the neck that only affects paying customers who want to use their content in a versatile manner.
I previously took AppleTV2 on a trip along with iPad, MacMini and old AppleTV - bit of overkill.
Where we stayed had no internet connectivity that I could easily use for AppleTVs.
No problems playing DRM content from the AppleTV1's hard drive.
No problem using Mac Mini hooked up to TV via HDMI to play back DRM content.
I ran into the authorisation issues when trying to stream conetnet from itunes to the AppleTV 2 or using Airplay to send things to AppleTV 2.
If Apple now invokes internet authorisation just to play anything they are crippling the device if there's a server or interent issue which is wrong.
This goes hand in hand with the fragility of the iTunes DRM content ecosystem in that in the unlikely event iTunes store closed if bought out/Apple failed and servers were shut down then your content would be rendered useless. This is quite unlikely in the forseeable future but who knows in 10-20 years time ?
AC

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Now I have privacy concerns with ATV2

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