The HD is obviously limited to 720p, since that's what the ATV2 can stream at. Personally, it seems like it's a bit of a lower quality on my ATV2 than say, my Xbox 360 (probably because this is a stream and not a dedicated Hulu App), but not having ads, as well as having everything in my one device, makes it more than worth it.
I'm a Hulu Plus subscriber and can tell you subscriptions work fine. XBMC didn't load it up right away, but after restarting the ATV2 everything showed up and I have my subscriptions!
Outside of making the interface a bit prettier, I don't have any complaints about Hulu Plus on my ATV2. I did have the same problem with returning to the menu before I disabled commercials. It's weird that the service works better without them. I sure hope nobody actually enjoys commercials!
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Oh, and as for other cool things you can do with it, are you referring to the jailbroken ATV itself, or just XBMC? I primarily use my ATV jailbrake for XBMC because there's so many features. For starters, YouTube is built right in as an optional add-on, and the ESPN add-on is located in the same source as Hulu.
But I hear Plex is a service that a lot of people actually prefer over XBMC, as long as you have a computer you can keep on at all times. You can also play emulators, which is really awesome if it works, I just haven't tried it yet:
http://wiki.awkwardtv.org/wiki/EmulatorsPlugIn
If nothing else, and if you haven't already, install nitroTV to make it easier to find things. And make google your best friend.