I ran into this as well with launcher 2.2 the only way I could change the res was to do a factory restore set everything including the res updated to ATV2.3 and was able to change res. Then ran the patch stick and then installed Boxee. Was seeing if the res had any affect on hulu playback when I noticed I couldn't go from 1080 to 720. Once launcher 2.2 was installed I was no longer able to change res.
The stupidest, most self-centered, appallingest excuse for an anthropomorphic personification in this or any other plane.
iMac OS 10.4.11 Mac5,2 Intel Core 2 Duo1.83GHz 2gb mem GMA 950
Ubuntu 9.10 AMD Phenom X4 Quad-Core 3.0GHz 4gb mem ATI 4850 1gb