It turns out, both movies and TV shows are being encoded in files that better suit TV screens. All of the TV shows on iTunes are now available in a higher-resolution format. Originally, episodes of The Office were around 110MB in size, and had pictures that were 320 pixels wide; the same episodes, sold at the same price, are now around 240MB, and are 640 pixels wide. (Note: while the files are 640x480 in resolution, widescreen movies and TV shows are letterboxed, so they actually have a height of something considerably less than 480 pixels.)
The new size can be a bummer if you already spent $48 buying the poorer-quality version of the first season of 24 And if you decide to repurchase, the new files take twice as long to download. The larger size also means more of a drain on older video-capable iPods. They didn't have terrific battery life for video playback before, and they do slightly worse with the new files.
But the larger-size video is still welcome news. The 80GB iPod can play six and a half hours of it (or more); the 30GB iPod has three and a half hours, up from around two. I connected the 80GB iPod to a dock with an S-Video output, and connected that to a 42-in. high-definition Panasonic plasma. I didn't expect a miracle picture, but I was happy to see that it was as good or better than standard-definition broadcast TV, if not as good as DVDs or HD broadcasts. I would not mind watching iPod-based movies on my TV, provided they weren't movies whose visual effects and subtleties were crucial. I used the $39 Apple dock, but you can also use other video-capable docks, like the one I recommended last spring from DLO.
The eagerly anticipated iTV (or whatever it will be called), slated to arrive next spring, will have an HDMI output for the simplest high-quality connection to newer high-def TVs. That bodes well for an even higher quality iTunes movie format that Apple might introduce in the future. However, I can't imagine how the current iTunes movie and TV show downloads will look any better when played through the iTV than they do today, with a docked iPod.