daocone,
I had been noticing similar behavior on my own wireless network while trying to stream videos from the web while projecting to my TV through airplay.
I seemed to be getting poor wireless performance on my local network while speed tests were within my expectations.
I experienced two issues which occasionally overlapped but were not necessarily dependend upon one another:
1) Videos streaming to the AppleTV would freeze up while they continued to play normally on the laptop
2) Laptop would occasionally stop to buffer video, with little other network traffic.
I did a little digging and looked in to the wireless configurations of all of my network components.
I also used KisMAC2 to get an idea of nearby wireless routers (I'm in a large building with many competing networks).
I found a solution for my problem but first a little background about my home network:
From the perspective of my laptop...
Laptop --wireless--> Netgear(switch mode) --ethernet--> Airport Extreme (normal router) --ethernet--> Cable Modem
My Apple TV is a wired client of the netgear router.
AppleTV --ethernet--> Netgear(switch mode) ...
While I'm not sure which fixed the issue, I made two major changes to my wireless routers settings:
1) I switched the access point from a mixed mode (b/g/n) to exclusively use G on a 5.0 Ghz band.
Two reasons for this:
--a) I have heard that mixed mode access points have the potential to lose 'throughput' when multiple clients using slower protocols are present on the network. I'm sure this varies with vendor, firmware, and hardware; it's probably not relevant here but I am including this because I see where it could be for other users with similar problems.
--b) 5.0 Ghz can offer a less hostile signal environment. The 2.5Ghz band has many devices competing in the same signal space, including cordless phones and microwaves. - As I'm surrounded by wireless devices, I made the switch.
2) I switched the access point's channel from 'automatic' to one which seemed to be less saturated with traffic (Use KisMAC2 to determine this).
After making these changes and restarting my access point I was able to stream the same video to the TV with much better quality. The freezing issue had been bothering me for some time and I'm hoping this will be a permanent fix.