Cpeat, I have at least a partial solution, which I discovered in the process of trying to solve a related problem. I export the slideshow to iMovie. With the slideshow selected in iPhoto (I'm using iPhoto 11 version 9.4.2) select "Export" from the "Share" menu, or click the export button in the bar below the main window. Note that the dialog window that opens gives you shortcuts to export options based on the device that you intend to use to view the slideshow, and one of the options is Apple TV. Selecting Apple TV automatically creates two different export files: low resolution (640 x 480) and medium (864 x 540). The latter gave surprisingly good results on a 2nd gen ATV connected to a 1080P television, but I got slightly better results by unchecking the defaults and checking "Display (1280 x 800)" instead. Make sure the box labled " " is checked, and hit OK. iPhoto will then render your photos, with music, to a .mov file in a folder named "iPhoto Slide Shows," and flag it in iTunes for viewing on your ATV. Lastly, fire up your ATV and look for the slideshow under Computers/Movies (not Computers/Photos).
The results are OK, but not as good as displaying the 12 Mp photos directly. Unfortunately, Apple has apparently not yet corrected the years-old problem that the ATV slideshow function does not always display photos in the same order that they are arranged in the source album. It moves all my portrait-oriented photos to the end of the slideshow for some unfathomable reason. Apple, if I am incorrect, please let me know.
And like you, Cpeat, I was surprised that Apple provided only the ability to select photos, events and albums as iPhoto sources, but not slideshows.