According to Steve Troughton-Smith, creator of Orbit, Lights Off, and many other popular apps, applications can “definitely” be installed on the Apple TV. The only problem is actually launching them, since the Apple TV’s frontend, LowTide, has no built-in app launcher.
The application definitely installs on the AppleTV, I used iPhone Explorer to verify: http://twitpic.com/2un568
Troughton-Smith has a very informative blog post written about the matter, and if your interested in details regarding the possibility of apps on the Apple TV, check it out.
Effectively, all the pieces are in place to build a remote-control driven 720p iOS app. All Apple needs to do is build the distribution mechanism and open the floodgates, and ‘Universal’ apps would be a definite possibility.