Well actually...
If your assumption is right, then there was no reason to integrate an external video IC into ATV...Please note that the mentioned 7300 does not include HDMI and HDCP, performed by a companion chip. In essence, a GMA900 would have done the job just fine if all the decoding was purely software, something Apple could not be ignoring when they added $15 to the design with that video solution (IC+ external memory).
Let's look a little closer to what that GeForce7300 can do:
* Dedicated on-chip video processor
* High-definition H.264, MPEG2 and WMV9 decode acceleration
* Advanced spatial-temporal de-interlacing
* Inverse telecine (2:2 and 3:2 pull-down correction)
* High-quality video scaling
* Video color correction
Well well, what a surprise! It looks like they picked the one 7300 that has all those features, for a box that is dedicated to the living room... Alike ATV, the 7300 doesn't support CABAC, as can be seen on the following comparison chart:
http://www.nvidia.com/docs/CP/11036/Pur ... arison.pdf
So I surmise something else: ATV is using a subset of quicktime (with a limited set of Codecs), optimized for home theater use. They modified parts of the QT H264 decoder to make use of the renderer integrated in the 7300, renderer that does not render CABAC. Of course, the accelerated API was likely provided "as is" by nVidia, so adding CABAC support (by the main CPU) will prove quite complex... This can be partially confirmed by doing power consumption measurements between ATV running its version of QT, and ATV running OSx and software QT. Not the same at all!
So it looks like ATV is the exception confirming both rule that "all OS X platforms are running quicktime in software" and "Quicktime isn't accelerated". Cheers!