Shaneisaac,
I had strange flickering image with my ATV 3 connected to a Sharp LCD via an HDMI switch box - same idea as the switch in a receiver...
The solution for me was to go into the ATV settings and change the resolution from "Auto" to 1080p 60 Hz.
Seems that there was some challenge handshaking with the TV to determine what resolutions it really accepted; forcing the ATV to output a specific resolution did the trick.
(Connecting the ATV 3 directly into an HDMI port on the Sharp TV worked fine in Auto ... but I need the HDMI switch as the older rmodel TV doesn't have enough HDMI inputs.)
HTH,
Karl