AnyDVD works great on the PC. There is one version that does blu-ray as well. This is paid software but it can rip almost anything (I have one blu-ray that it struggled with but that was fixed after one of the frequent updates). They do have a 21-day trial if you just want to rip a couple of movies.
You then use Handbrake to create an m4v h64 file for Apple TV. The latest release has presets for both the old (limited to 540p) and the new (limited to 720p). You can go above these - I have displayed 1080p on my second generation Apple TV - but its isn't always reliable so I stay with the standard setting.
I have converted around 250 movies (about 1/3 bluray) this way and it just works. I also make lower-res versions for the iPhone so my son has entertainment in the car. The only thing is that Handbrake takes a while to do the conversion (3-4 hours for a typical bluray on an i5-660), but I run them overnight in batch. The AnyDVD rips are much faster than that.
