A couple of days ago AnandTech published the results of their HD video decode quality and performance summer 2007 report:
The current generation of graphics hardware is capable of delivering high definition video with lower CPU utilization and better quality than ever. Armed with the most recent drivers from AMD and NVIDIA we have spent quite a bit of time testing and analyzing the current state of HD playback on the GPU. And we have to say that while there are certainly some very high points here, we have our concerns as well.
Since the last time we tested HD playback performance on the 8600 line, we have seen software support improve dramatically. PowerDVD, especially, has come quite a long way and now fully supports both AMD and NVIDIA hardware with full hardware acceleration and is quite stable. Drivers from both camps have also now added HD video quality improvements in the form of post processing to their drivers. HD deinterlacing and noise reduction now (mostly) work as we would expect. This is in contrast to the across the board scores of 0 under HD HQV we saw earlier this year.