Streaming .vob files on Apple TV?

Hi, I'm thinking about purchasing Apple TV. I just got off the phone with an Apple Salesperson who was very nice, but seems to have been a bit mistaken about something.

I have a HUGE DVD collection, and I want to rip all my DVDs to my computer, and then be able to stream them to my TV. Mostly it's so I can get rid of the DVDs, and free up space. I have a DVD ripping program, and the files are output as .vob files.

The salesperson said I could import those .vob files into iTunes and view them there in iTunes, or stream them from iTunes to my TV through an Apple TV. However, when I tried importing the files in to iTunes, I had no luck, so I think the salesperson was mistaken. (Nice, but mistaken.) 😉 The .vob files play on VLC, which I have on my computer, but on in iTunes.

So my question is about playing .vob files on my TV. I was hoping that purchasing an Apple TV might be a good solution for me, but if the files won't play in iTunes, then they won't play via Apple TV onto my HDTV, right? Are there any easy solutions out there? Do I need to convert the files to a different format? If so, what format, what converter software should I use, and will the quality still be DVD quality when viewed on a big-screen TV? Is this going to be ridiculously time-consuming?

Thanks