Wow, there are a lot of settings we could play with in iTunesPrefs.plist inside the /Media folder!

Somehow, and I'm still trying to figure it out, I was able to get my music inside appleTV's main "menu" without it getting copied to the media folder (and creating 2 copies of all my music on my hard drive). I don't know how I did it, because usually enabling syncing made 2 copies, but this time it didn't duplicate the files and I can access all the music from appleTV without going into the sources menu! (iTunes still has to be running) There are some settings in the .plist like "automaticMusicUpdate" and "homeMusicDatabaseID" which might be useful... Also, I noticed a few settings were different when I compared the .plist I had backed up before getting this to work and after. We might be able to specify where to look for media...

I figured out how to sync your iTunes Music without copying all your files to the media folder
First of all, you need to shrink the resolution down to 640x480, or 800x600. Then, open AppleTV OS: it will open in a sort of window, leaving the OS still usable. Now use the Apple TV interface: go down to sources, and then sync your library with iTunes.
Now, when it tries to do it, just stop iTunes from copying files. Voilà! Apple TV OS will be able to access all your media in the iTunes Library without having them copied in /Media.
KNOW ISSUES:
- When you reboot Apple TV OS, it just tries another time to sync and so it will copy the files.
- If you think disabling sync will solve the problem, well it doesn't work, because if you try to do it Apple TV erases automatically all the files there are in /Media and erase its library too.
Sherry Haibara

Hmmm... thats weird because I have music syncing disabled, only streaming is enabled (and I think video syncing) but i can still access the media as if it was transferred to the apple TV. (iTunes has to be running though)

The following screenshot is from the main appleTV artists menu! I did not go into sources or anything to find the streaming shared library.

I've found the definitive hack
Redo this:

Now, exit from Apple TV OS.
Open the Finder, and right-click on the Media folder. Set the permissions to "read only" for ALL the users (yeah, even the admin and the system). Make sure you apply these settings not to the folder only, but to all the items inside that.
Now, re-launch Apple TV OS: it will sync your entire Music folder, but it will not copy your files to /Media. Enjoy.
Sherry Haibara

That's neat. But mine already seems to work without this hack

Ah well, glad it works

Where I can change the resolution?

I meant just changing your system resolution, not the one that appleTV uses. Just change it in system prefs (displays) to something like 800 x 600 or 640 x 480 and then run appleTV. It should appear as a much smaller window and then you can use itunes behind it.