I knew you could technically hook any HDMI device to the Xbox and it would at least display it. I was testing it with my Apple TV tonight, at first I didn't want to use it because it would only output audio in stereo. I found an option deep in the menus for surround sound output but it says beta next to it. I'm watching a movie now and it looks and sounds exactly as it would if it was running directly through my receiver.
I figured there would be no way it would control the Apple TV. My wife jokingly said "Xbox, pause!" when she went to the bathroom. I went into settings, told it to control my "Cable box", typed in Apple as the brand, Apple TV as the model and I'll be damned...it controls it when you say commands.
Just a heads up for anyone who wants to plug something other than their cable box. I've also tried my 360, it worked fine but I didn't try a game. There might be an input lag, I saw none with my remote control. If you have a sound system you'll want to change the audio. When in "Watch TV" mode hit start (or menu, or whatever they call that button now), go to "Troubleshooting" then at the bottom you'll find a checkbox that enables surround sound.
I'm not sure what type of surround sound it will passthrough, but Dolby Digital 5.1 is working, my receiver still reads Uncompressed 7.1 and all 7 speakers are working. We've got a fairly nice, pieced together theater (not a home theater in a box) and the audio quality is fine with me. I'm usually pretty picky on that.
I'm sure people will wonder why I would bother hooking it to my Xbox, the reason is...I like being online to get invites and can quickly play with friends. I know a lot of "hardcore" gamers like to switch inputs and complain about how the hardware in this thing is (slightly, but massive to fanboys who seem to have forgotten Xbox 360 and PS3's power gap) less powerful.
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