I’ve now go the problem solved, too, but not in the same way mcullison did.
I tried that first, bringing a wired-to-wireless bridge into the room with the TV and connecting the AppleTV to the wired side. It was clear from the boot messages that it did successfully get an IP (i.e. the details of its behavior were not the same as when I was experiencing the problem) but still ended up hanging.
So next I tried a different flash drive (Aptiva 2G, $14 at Office Depot). In order to isolate the two potential issues (wireless vs. USB drive) I put the AppleTV back on the wireless network for this attempt, and it worked on the first try. So I guess it was the USB problem all along, as ‘aTVFlash’ suggested. (Original drive was a 512M Cruzer.)
It was very surprising how much the bad drive appeared to work … it was clearly loading and booting a kernel, and running startup scripts. Huh … anyway, clearly that was the problem.
thanks for the help.