Working well so far on my year-old MBP. For some reason it detected "good" quality even though I have a 3 Mbps connection and that should be "best" according to their site.
I could see this being added to Apple TV, but I wouldn't count on it. This is just a beta version, and it's also a Microsoft product (eek). But Microsoft, Apple and Netflix don't hate money, and Microsoft and Apple have a history of working together.
I also don't know that I see this as straight-up competition to the Apple TV downloads. A little bit of it is, but most of the iTunes rentals are for very new movies. Most streaming stuff is "older" except for TV.
As far as HD streaming, don't count on it. The Internet is a series of tubes, not magic. It would take much faster Net connections than most of us have to literally stream it.