Since this item was posted in hackaday(January) a lot have been done. There is at least one dedicated distro for running XBMC on the Pi.
When I tested it(about a month and a half ago, not with the latest version), it's wasn't a pleasant experience. Video did run smoothly, but menus where painfully slow.
(I've used a slow SD card which might caused some of the problems - I ought to try again with a better one)
Try OpenELEC and XBian. They're much much smoother at the menu (over 60fps at 1080p when you disable the RSS ticker on OpenELEC). It helps if you overclock the already overclocked Xbian too. I have mine set on around 920MHz (no change in voltage though) and have it running all day for about half a month now. Seems to be working fine.
Raspbmc stuttered every few seconds when playing 1080p video when I last tried it (a month or two ago). OpenELEC, however, has performed fantastically; occasionally lags a touch on some menus and with some recent builds the cover art appears to be.. erm.. blocky, but for actual playback it's great.
I recommend installing the refocus skin (sadly it's not in the repo but you can grab it here: http://xbmc-focus.googlecode.com/files/skin.refocus.release-... and install via USB), it gives me around 10 extra FPS over the stock Confluence skin. Have you overclocked yet? If you run at 900MHz, i swear it feels like a whole new device. You will need to mount your /flash partition as rw though (mount -o remount,rw /flash), because it's set as read-only normally.
"... Even if you're amazed by it, you could have at least found an article about results ..."
Not sure what you mean about 'results'? Could you find one for me and post it?
"... Otherwise please use the original title, unless it is misleading ... Please don't submit comments complaining that a submission is inappropriate for the site. If you think something is spam or offtopic, flag it by going to its page and clicking on the "flag" link. ..." ~ http://ycombinator.com/newsguidelines.html
(so is this a moderator post commenting back? - notice a title change & this comment on a new account. If so, moderator, stop being so snarky)
FWIW, I'm running Raspbmc RC5 and am able to watch 1080i MPEG2 (recorded HDTV streams) and 1080p H264 streamed over my local network. Sometimes audio decoding causes issues (I don't have it hooked up to a receiver) like strange audio glitches.
CPU usage does stay high while using XBMC menus, but it seems responsive enough.
It does have some problems with decoding DTS content (I don't have a receiver) though. I've tried a couple of things already like overclocks and re encoding the audio but I'm still trying to find the sweet spot. This is all on RC5 raspbmc, still have to try openelec.
What is the Pi's Flash performance like? For my uses, 1080p video is all well and good, but most of the internet TV I watch uses a flash player backend, which is something I ran into quite hard when trying to build a low powered Atom media center box.. it can barely keep up and desyncs like crazy.