The internal hard drive is why I chose the ATV too. Computer doesn't need to be running, no wireless issues, etc. If you store everything as Apple Lossless, you should have plenty of room. If you need more room, synch what you listen to most often and stream the rest.
If Android has an ATV 2 app, I don't see why it wouldn't work for the ATV 1.
If Android has an ATV 2 app, I don't see why it wouldn't work for the ATV 1.