Doing so will update the Apple TV to a tethered jailbreak of iOS 5. Something I assume you wouldn’t want to do as 4.3 is an untethered jailbreak meaning you do not need the assistance of a computer to boot the device.
You will need to use iFaith (assuming you have a Windows computer) to pull the SHSH blobs from the device as Apple is no longer signing version 4.3 which means if you do not have the blobs you will not be able to return to that version.
aTV Flash is mostly Media Player (similar to XBMC without the plugin architecture) however it streamlines in the installation/update of a set of 3rd party applications. Note that if you purchase aTV Flash and are running version 5.0 on the Apple TV XBMC will not show. It is just a matter of time before fireCore add’s it to the available applications to install.
This can cause problems if different versions are installed over top of each other. I would recommend removing XBMC before installing it through aTV Flash if you go that route.
I can’t get past step 1 - ifaith 1.4.2. It is asking me if I’m dumping an atv2 - I say yes - it tells me to plug in the atv2 via usb and to not hit start until the atv2 is blinking. There’s 1 longer blink followed by a quicker less bright blink. I hit start, it tells me to prepare to hit menu/play, I do, then release when asked, it blinks very rapidly for second and then at about 2 seconds left it says failed to enter DFU. What am I doing wrong?