Apple Hacker Mauricio Pastrana discovered a way to export composite video from his Apple TV in full color. He gives all the details in this handy YouTube tutorial. Normally, when you use composite out from AppleTV, you're limited to black and white video from the green channel. Instead, if you plug in HDMI output (he uses an HDMI-DVI adapter with a DVI-VGA adapter attached), and then switch resolutions with that attached, wait about 5 seconds, and reattach your RCA cable to the green channel, it suddenly switches to full composite color.
I haven't tested this myself, so let me know if it works for you.