Restoring from iTunes was finally successful in San Jose CA, June 26 2:57PM.
I went out and bought a micro USB cable after the upgrade continually failed over the last couple days (over both WiFi and ethernet), and this did the trick (or else things just happened to be straighted out on Apple's end when I returned from the store).
One thing though. The Apple TV wasn't recognized in iTunes on an i7 iMac (running 10.6.8) with the latest iTunes. But, it WAS recognized on a 2010 Mac Mini Server also running 10.6.8 (but Server) and the latest iTunes. This is after trying several suggestions offered by Apple on their support site e.g. reboot the i7, etc. Of course, you have to unplug both power and HDMI from the Apple TV when restoring from iTunes (per Apple guidelines) and I'd done both these on the i7. Oh well...go figure.
I was upgrading from 4.1.1 and Apple TV now shows version 4.2.2(2203).