Original HDV/AVCHD vs AppleTV picture quality

I've read several posts where people complained about iMovie's AIC and AppleTV's HD quality. I have HD cable and a very nice 1080i TV, but with home movies I'm use to standard def DV (edited in iMovie and burned to DVD). I've shot with HDV and AVCHD, played them directly on the HDTV and certainly had the "wow" factor.
So the question is, once I take the HD original footage, import it into iMovie, save it for AppleTV and play it back on the same HDTV, how much of that wow factor will be lost? Will someone say "looks nice, is that hi-def? Or will they stare at amazement and say "me got to have that!"

There are several factors to take into account here.
Firstly the AVCHD as you know will be converted to AIC, AIC isn't uncompressed but it is pretty close so at this stage I doubt you will see any degradation (as much as you like your HD cam, remember it's a consumer camera, so in terms of quality it's not the best to start with).
There isn't really very much you can do with AIC due to its huge file size (data rate will be somewhere around 80/100 Mbps), so consider it an intermediate codec.
After editing you have your choice of conversions. You could export it out at full 1080 resolution at a relatively high datarate, because the video is being converted there will be some degradation but again you are not likely to notice this.
The tv will not however play these files and they will need further reduction in resolution and data rate. What these reductions are depends on whether you are using PAL or NTSC, for PAL you can export to 1280 x 720 @ 25 fps and a datarate of 5 Mbps, NTSC will be 960 x 540 @ 30 fps and a datarate of 5 Mbps. If you are using imovies tv preset, PAL will be exported also at 960 x 540, you'll need to use the manual settings to achieve 1280 x 720.
While the difference in quality after conversion for the tv, may well be noticeable, in my opinion it's certainly acceptable.
On the other side of things, if you want to edit your movies you are going to have to convert from AVCHD, tools for editing this format are effectively non existent. The PS3 and x-box may well play movies exported to 1080 at higher datarates than the tv, but handling such files becomes difficult. They are relatively large and will soon fill up the device, I doubt the PS3/x-box will handle streaming of these files very well. Delivery of full quality HD is still pretty much limited.
Finally. consider also your TV, although it accepts 1080 does it have an effective pixel display of 1920 x 1080, if it doesn't it may well be that the effects of such conversions are not as noticeable as if it did.

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