Well, before anyone gets excited I recommend someone else verify my findings as I may have been lucky. 🙂
I don't have all the specific details handy but I talked to a friend who specializes in AV gear yesterday and he loaned me an HDMI switchbox from Monoprice. I tested it with the new AppleTV and my early 2004-era Sony 50" HDTV with DVI. Wobbling is pretty much gone (seems to be some slight movement when up close but at normal viewing angles it's fine and I'm now going to replace my first generation AppleTV with the new model now that I can use it.
Here's the Switchbox I'm ordering that worked for me:
http://www.monoprice.com/products/product.asp?cid=101&cp_id=10110&cs_id=1011002&pid=5557&seq=1&format=2
The only glitch I had was when rebooting the AppleTV or waking it from sleep the picture had a very distinct pink "hue" to it. This was resolved by switching the inputs on the switch box to another input and then back again. Maybe I'm using an older HDMI cable in the mix that is doing this, I dunno but it's certainly something I can live with. Especially if it means holding off replacing my TV for a couple more years.
I welcome other people to try this solution and report here if it works for you as well. It works fine for me and I'm ordering one of these Monoprice boxes today.
The box also has the added benefit of separating out the audio from the HDMI cable so you can do optical out from the back with an older receiver that lacks HDMI. The only downsides on the device I felt were that one HDMI port is on the front (3 on the back along with the output) and that it has bright LEDs on the front of the box that are annoying in a dark room while watching a movie (nothing some tape can't fix).
I hope this information serves useful to others.
Thanks,
Bill