If you are feeling a little adventurous, you can hack your appleTV to allow the playback of VOB's either from a mounted network drive or copying the vob files to the unit and using either nitoTV or Sapphire.
As far as conversion, you should check the tutorials/how to guides at videohelp.com. They have conversion guides for just about any format you'd be interested in. I've had good luck with videora or the AppleTV converter that Videora has.
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