Seas0nPass to jailbreak Apple TV 2G on iOS 4.2.1 is available now, the guys over FireCore has successfully jailbroke Apple TV 2G running iOS 4.2.1 with a new jailbreak tool called Seas0nPass, for now it's only available for Mac users. Seas0nPass jailbreak is like PwnageTool in technicality, as it creates custom firmware that you can restore to via iTunes.
How to jailbreak Apple TV 2G using Seas0nPass:
Download iOS 4.2.1 for Apple TV 2G
Download iTunes 10.1.1