One of the best way to use Apple TV on your iPad, is through the Remote App. This app enables iPad users to manipulate their device with the assistance of the Wi-Fi network. Among the interesting features of Remote App is the fact that you can do almost everything with your iPad such as adjusting volume level, skip music, replay, see a movie, make a playlist, search music, key entries through iPad and initiate commands through iPad's QWERTY.

You can download the Remote App FREE at iTunes, with the latest version already tested with iOS 4.0. This app was last updated on September 28, 2010 and also works with devices such as iPhone and iPod Touch. "Remote has been fully optimized to take advantage of the large screen real estate of the iPad as well as the spectacular Retina display in the iPhone 4, and new iPod touch."

Apple TV is predominantly a device that allows you to rent movies or TV shows and watch them on your television. Apple TV also is integrated with Netflix, so you can stream content from Netflix as well.
When it comes to “connecting” to an iPad (or iPod Touch or iPhone), it seems like there may be some limits on how well these connect. From Apple’s website – if you download the show on your computer, you can move it to any other device (iPod Touch, iPhone, iPad or Apple TV – but only one device at a time), but if you download on the iPad, iPhone, iPod Touch or Apple TV, you cannot move it between devices.
It does seem like Apple is making it so that you can use AirPlay to wirelessly watch something on Apple TV that you have downloaded on your iPhone or iPad, but it seems like this may not be available right away.
While it seems like there are some kinks now, I would guess that Apple will get this worked out and somehow it will make it so you will be able to have the rented show or movie in all places at the same time.