You're probably right, it might be the hard drive. Would be interesting if a SSD was put in. I recently resolved most of the performance issues by moving away from a NAS and installing a larger drive in my iMac, mirrored using SuperDuper, but that's another story, but since I know my ATV is fine, I probably won't be looking at replacing it.
In terms of the output, even if USB could be used, it seems like there are a lot of debates on the quality and implementation. Maybe you can look at just getting the best out of the Toslink. A reclocker like the Pace Car might be an option. One thing that I'm really curious about is the Altmann UPCI (Ultra Precision Clock Injector).