using ATV G-2 with IOS 4.0 (never upgraded since i bought it). Everything went fine, the custom IPSW was created and i entered into the recovery mode. I got stuck with restoring the ATV and got the following msg "The device isn't eligible for this build". It looks like that i am not the only one having such problem. i tried by updating my Mac as well as the i Tunes and tried for another time, but it didn't work. I even tried another machine with no luck.
Later i tried the tiny Umbrella and it didn't work.
I am not really sure whether Apple, in the process of verifying the custom_restore.IPSW build, is blocking it due to modifications or not. I searched the web for hints on how to get around this error but with no luck as well.