I was reading a rant about the new AppleTV on SmugMug's blog and found myself nodding in agreement with "Imagine that the AppleTV ran iOS and had its own App Store." I then reached into the drawer for the iPad's VGA connector I'd bought a few months back for $30 (haven't seen any cheaper knock-offs yet), plugged my iPad into the flatscreen, and there it was, an AppleTV with an app store. I downloaded a few Stanford's free video lectures from iTunesU -- the native Videos app supports video-out -- and played them on the large screen. (Other shows rented or bought through iTunes might not play via VGA.)
I watched two movies from the Netflix app; they weren't of Blu-ray quality, but were still very watchable and streamed smoothly over wireless. You can't charge the iPad while the VGA connector is in, but the battery lasted long enough to provide video entertainment for the entire evening.
Among other video sources that looked fine on the big screen were websites (some through Safari, others through the Perfect Web Browser app that almost lives up to its name), the ABC app, YouTube, and AirVideo for watching video files stored on other PCs at home and streamed to the TV via iPad over the wireless. The Hulu app, too, should work with video-out, but I don't have the Plus subscription to try for myself. Many more video apps are in the works.
I've been looking for a small HTPC to replace a dead desktop as a bridge between TV and the internet, perhaps an Acer or a Lenovo, but for now, it turns out the iPad will work just fine.