Hi gang, have been following this discussion with great interest and am considering making the switch from a stable jailbreak ATV2 (pre-5.0 firmware) + plex app solution.
One thing I haven't been able to figure out from the FAQ and other info sources is: does PlexConnect support VIDEO_TS playback? I still have a large number of DVD rips still in this format, and haven't been able to enjoy them on my ATV to date. If the answer is yes, this would push me to make the switch to PlexConnect today. I'd go ahead and do the test myself, but would not be able to revert to my current stable solution.
Even on the desktop version it is sketchy e.g. No network shares and I have seen mention of support being dropped.
I would suggest using e.g. IFlicks to transcode them eg to a natively supported Apple format but I guess it depends on how much the xtras are worth to you.
They should really add extras in as a well supported feature but I guess it just is not that heavily requested.
Thanks for the responses. Been dragging my feet on converting the majority of my VIDEO_TS files to MKV in hopes that something would come forward to solve the problem of playing them natively with ease. Guess I should just plan on making the conversion.