Did more troubleshooting last night. It is ONLY the HDHR PRIME that has the macro blocking and throttled bitrate when connected through the Closet Switch then the Verizon G1100 to the LR AppleTV. In this image you can see the macro blocking and the frame rate is down to 1505 kbps, roughly 15-20 seconds into opening the stream.
However, if streaming from the HDHR CONNECT that is connected to the FROG Switch then to the G1100 then to the LR AppleTV it plays fine.
The HDHR PRIME plays fine to the MB AppleTV and the GR AppleTV. The image below is the HDHR PRIME connected to the Closet switch that then goes to the G1100 that then goes to the FROG Switch that the MB AppleTV is connected to, no issues.
Finally, as a mentioned in the original post if I run a Cat6 cable direct from the Closet Switch to the LR AppleTV (bypassing the G1100), it fixes the macro blocking and loss of signal. However, every about 25-30 minutes the video pauses and the Total Cache builds up to about 45-55 seconds and then the video resumes. I also noted the large number of Dropped Frames.
Finally, removed the ethernet cable and ran the LR AppleTV over WiFi. Stream plays fine on LR AppleTV over WiFi.
Other troubleshooting:
Change Video Driver to 'Experimental': no video at all
Changed Audio Driver to 'Experimental': same macro blocking and throttled bitrate
Changed AppleTV "Match Output Frame Rate" to On and Off: same macro blocking and throttled bitrate in either setting
Used the new HDHR App on the Apple TV instead of Channels App: same macro blocking and throttled bitrate
In addition to the MB and GR AppleTVs that play fine, opened streams on a laptop and iMac using HDHR app: all play fine
This is driving me nuts. I do not understand why when the LR AppleTV is hardwired to the G1100 the stream from he HDHR PRIME will not play?!