Oh, and please get rid of this awkward linear Front Row user interface! We want Front Flow i/o Front Row!! Hmm, something like this would do: http://www.youtube.com/watch?v=pyd8O-2mkgk
I like the current BackRow interface for AppleTV. It works.
Where I can see this CoreAnimation demo coming to fruition is with AppleTV IP streaming of TV from the internet. You can have hundreds of channels that can be searched for instantly by topic or title with the ease shown in the demo. I think it's a long way of, but the possibility is there. If Apple does decide to go this route I think we'll first see it in the form of iTunes movie trailers viewed from AppleTV.