Recently, I've had this same issue on my ATV 3 and 2. I ran the Netflix "Example Short 23.976" on both and got the same "shotty" standard def. results. However, when I run the Netflix app on my iPad 2, I get HD quality as I should. When I Airplay it to my TV, it stays HD. So for now, I will have to airplay my favorite shows to see them in HD and ditch the ATV Netflix app until this is fixed, or I breakdown and buy a Roku or Chromecast. *sheesh*
I contacted Netflix, but they just wanted to run me through the "try restarting you ATV", "Try restarting your router" crap. I did all that many times, up front, before I discovered it wasn't on my end. I have Time Warner Cable internet, 30mbps down, 5mbps up per Speedtest.net. Everthing else (Youtube, etc.) working normally. Thought I'd post this FYI.
There are also some articles out there about Netflix struggling to meet demands, server wise. But since it runs fine on my phone and iPad, I don't believe that's related.