I have a system with a PIII-600 overclocked to 800MHz. I have both winDVD 2.3 (not the multichannel sound version because I output the AC3 bitstream to an external Sony AV receiver for decoding via the sound card or the Hollywood+ card) and a Hollywood+ card. My video board in this system is a V3500 which is connected to a nothing so special Sony 27" TV set.
Using the software decoder, the image on a comuter monitor is fine, I did not try 16 bit pixel depth, just 32 bits. When I use the software decoder and the video board is sending an output to the TV set, the picture is fine with the exception that when dimly lit scenes are present, I notice a less than smooth transition from dark area to a lighter area or to a darker area.
When I use the Hollywood+ card, the TV image is even better than with the software decoder. I did not attempt to use the Hollywood+ in conjunction with my computer monitor because there is pretty much universal agreement that the software decoding would be better.
For viewing DVD on the computer monitor: software decoder.
For viewing DVD on a TV: Hollywood+
Paul