The AVIs will not show up on the AppleTV, even after the patch. iTunes only syncs your photos from iPhoto onto the AppleTV. BUT you can take those AVI files out of iPhoto, put them on the Desktop in a folder, and transfer them via Transmit or Fugu to the Movies folder in the AppleTV and play them that way. So yes this patch should let you play AVI files on the AppleTV, it just takes a little bit of work, it is not automatic syncing like iTunes.