The XBMC dev team just released a native iOS client for Jailbroken ATV2, iPad and iPhone 4.
This is the full deal. A native XBMC client running native videos on iOS. How is it possible? The team stumbled upon a private Apple API that allow wide open access to private video encode and decode routine.
Armed with those that have been able to write an application that can hardware accelerate the decoding of all video format supported by XBMC.
Now if only there was a proper Jailbreak for the ATV2… Right now you are forced to use a tethered Jailbreak which make using XBMC on the ATV2 more of a proof of concept.