Q: Apple TV update hangs during step 1 of 2 installation, any help?

You can't do much else besides pull the plug. If it causes further problems you should be able to restore as below:

Get yourself a micro USB cable (sold separately), you can restore your Apple TV from iTunes:

1. Remove ALL cables from Apple TV. (if you don't you will not see Apple TV in the iTunes Source list)
2. Connect the micro USB cable to the Apple TV and to your computer.
3. Reconnect the power cable (only for Apple TV 3)
4. Open iTunes.
5. Select your Apple TV in the Devices list, and then click Restore.

On the other hand you may be able to simply start the update again.

thanx

It's works

Yah, so much for the evening's viewing enjoyment. Been a good hour or more. Next time it asks I'll choose "update later." Like when I'm asleep. Unplugging now, thx.

Hmmm... Wonder if Apple will buy me a new plasma TV now that the Apple logo is burned into it.

Really?

Apple has great  service but I don't think they do self inflected wounds.

Try turning the Plasma off or changing the input back to cable during the update.

Perfect solution. Thanks!!

I too had the same problem. Following steps recommended by Winston Churchill Worked like a charm.

Specifically, unplugging and restarting the Apple TV worked in case you are discouraged by the thought of the second option in that answer.