can you connect an external hard drive to the USB port on the AppleTV and use it to play movies; a sort of memory expansion?

not yet, but hopefully soon. there has been a 1k$us bounty by appletvhacks.net for this and a glimmer of some sort of release to come soon. currently with the 1.0 software usb support is as follows: keyboard, mouse, & several brands of eyetv compatible tv tuners. afaik the 1.1 update changes things and will need to be hacked again for compatibility.