Short answer: No, it is not the stupidest Apple product ever.
I use my AppleTV all the time for...
1. Watching video podcasts.
2. Watch TV shows that I've recorded on my Mac (via EyeTV)
3. Watch my DVD collection (via Handbrake)
4. Use it as a remote speaker to stream my iTunes to my home stereo
5. Rent and buy movies directly
6. Buy TV shows directly
7. Have access to my entire iTunes library from the living room
I bought the cheapest model because I didn't plan on storing anything other than "latest" episodes of tv shows and podcasts on it.
Is Apple TV the Stupidest Apple Product Ever?