Apple TV or BluRay player

I am debating whether to take the BluRay plunge or just get an Apple TV to watch movies. I am not much of a videophile, but was recently very impressed w/ picture quality of my friends Sony PS3 feeding my 1080i projector. We fed audio via toslink to my dac and the sound quality is also very good. I am planning to keep everything 2 channel; even though my current pics on my virtual system show otherwise. My goal is to keep it simple; (seems to reap better results in audio). Question, tho' - can one play current dvd collection onto Apple TV, or does one require "digital copy"? I only have 2 digital copy movies on my iMac. Apple site does not appear to indicate ability to play dvd's.
It depends on what is important to you, convenient or picture quality. AppleTV limits you to watch movies offered by Apple iTunes Store which is not 1080 HD so the quality won't be as good as BluRay.

AppleTV isn't a DVD player so you can't play regular DVD directly from it. You need to have digital copy of the movies added to the iTunes library and transfer to AppleTV.

For the DVDs which don't offer digital copy, there are softwares available, free or paid, which allow you rip DVD into digital copy. Please beware that not all DVDs can be ripped due to different copy protection schemes.
I run both in both my systems, the AppleTV is cool for a convenient music server, but as the above poster said, it is only 720p. Blu-ray will give you 1080p AND uncompressed audio. The difference between DVD/AppleTV and BLu-ray when it comes to audio (even in two channel) will be significant.

I would recommend both but if you can't swing both at this time the Blu-ray player will give you more performance for the $$.
What about the new Mac Mini with hdmi out? Then use iTunes for getting the movies. Includes a disc drive also for dvd's. Just no blu ray...

Personally, I love my direct tv on demand. 1080p...
Jfrech, For his purpose I don't think Mac mini will be cost effective. He can get an AppleTV and a PS3 for the price of a Mac Mini.
For movies, the current Apple TV is quite outdated-- unless you have a large collection of movies and/or TV shows already purchased and on your computer.

A couple of years ago, the Apple TV was one of the few devices that allowed you to stream video over the internet to your TV/PJ. Now most of the consumer Blu-ray players will stream video from some combination of Netflix, Blockbuster, and Amazon, (and more) which together offer more choice than iTunes.

Plus Blu-ray players of course play Blu-ray discs, which as pointed out by others are far superior for both audio and video to streaming almost anything online, except for 1080p content, which currently is fairly limited. New Blu-ray players also play regular DVDs much better than most of the older DVD players, even the boutique brands.

Is your projector a 1080i CRT projector? I ask because there is no such thing as a 1080i digital projector-- which nowadays are all either 1080p or 720p, with some older machines having less resolution, buy still progressive.

Dg1968, my projector is an LCD; does very well in 720p & 1080i.

I think from the posts, BluRay is probably where I will end up. Interesting that some players will stream - didn't know that.

Anyway, the other option I found while researching was Vudu, which seems to offer more than Apple TV. Don't know that I would use enough to make it worth it for me. (Like all you can eat joints - I never get my moneys worth.)

And now the choice of either PS3 or Oppo?!
I like Oppo but there are some players such as Samsung that have Netflix built in. The device lets you download movies to the player.

I have an Oppo83 and it is fantastic for video, I use one both with a pioneer Kuro plasma, and a JVC DILA 1080p projector. The Oppo has a great video section, both with DVDs and Blu-rays. It has the same video processing as the top Anchor Bay DVDO outboard processor. Of course for your PJ, you would set it to output 720p, because its video section is probably superior to that in your PJ.

Unfortunately the Oppo doesn't support downloads/streaming from any of the major providers (Blockbuster, Amazon, or Netflix). I use a Tivo Series 3 for that. In fact the TiVo is why I ditched my Apple TV altogether.

If you didn't know, Apple is supposedly set to release a totally revamped Apple TV in the near future-- which also supposedly will be based on the iPhone iOS (but know knows really). This is to directly compete with the upcoming Google TV device. Both of these new machines are supposed to function to better integrate the internet with the display.

People speculate that developers will be apple to write Apps for these devices like they do now for the iPhone/Droid. So Netflix can supply an App that will allow the Google TV/Apple TV to stream movies directly.

Supposedly the new Apple TV will be a standalone product, while the Google TV will be standalone, and will also come built into some products (Sony TVs and Blu-Ray players first).

I am personally waiting for the Apple TV. If I were in your situation, I would get an Oppo 83 now for DVDs/Blu-rays, and wait for one of these newer internet devices for everything else.