The Apple TV hardware can't play the usual HD video files that are broadcast over antenna or cable. It has a maximum of 720p, 24 frames per second (fps), with a fairly low bitrate (up to 5Mbps).
Normal Turbo.264 HD exports to Apple TV
are 960 by 540 resolution, at least in North America. To go beyond that level, you can create a custom preset in Turbo.264 HD.
This setting (Apple TV, 1280 by 720, 4500kbps) is something that can work - it will display the "HD" badge in the Apple TV interface. You can use these settings for source material that's 1080p, 1080i, and 720p - the output will always be 720p.