For those who want to restore back to factory and then update to 2.2 manually I've zipped up the 2.2 updage DMG and HDMI, IR and other associated firmwares along with OSupdate.
http://www.gigasize.com/get.php?d=xqfzbzcs5kb
You'll need to SCP these to the AppleTV.
To begin, place the OS or any other updates into /Users/frontrow/Updates on the Apple TV.
Next, copy the osupdate binary to the Apple TV. Make sure it is executable (chmod +x osupdate if necessary) and then execute it as root:
It will print a few lines of text, and your Apple TV should automatically reboot.
This won't touch your restore partition so you'll continue to have that to fall back on.