I recently installed System 7.5 onto a Macintosh TV. When I switched to the TV Mode, all I got was some colored outlines of the television picture. A clean system software install and zapping the PRAM did not solve the problem.
Version 1.0.2 the TV Setup control panel is now available from the Apple Software Updates web site at http://www.apple.com/swupdates. This version fixes the compatibility issues with the Macintosh TV and System 7.5.