The key to the AppleTV is that it is a pure MPEG4/H.264 box, and uses the NVidia GPU for decoding assistance. If you throw Boxee or XMBC on it, neither have GPU assist, so they have to rely on the Pentium M to do the heavy lifting.

Matt, as far as Handbrake, try out one of the development builds here. A lot of cleanup has happened since the last release, and on OS X, it's almost mandatory to run to encode anything without a crash.

As for an ION box, I would expect them to be a bit below CPU power of an Apple TV, but higher GPU power. The Dothan based Pentium Ms tend to outclass the Atoms by a little bit.