I just got my card, so I might be wrong, but I'm about 99% sure it will only pass decoded video to your tv.. and only mpeg 1 or 2 at that. My understanding is that the card overlays the DVD playback on an area of you VGA monitor when you watch movies on you computer, or just sends the video output to your tv. It doesn't send anything from your computer to the tv (besides the decoded mpeg output from the card's chips). I was hoping that the card would let me watch DIVX mpeg4 rips on my TV, but no dice.
So far, I like the quality of the output... I'm running it through a vcr to my TV (no RCA or s-video inputs). The only things I've noticed so far are slightly noticable slanted bars running from the lower left to upper right and scrolling up the screen during DVD playback on the TV (hows that for a description). I'm using Zone Selector to kill the macrovision so my VCR won't freak, but I haven't had a chance to play with anything yet, so I'm not worried about it. Beyond that, the picture is as good as my normal DirecTV output, and the sound is sweet as well... much better than my VCR.
As far as pass-through quality, I have an inexpensive 17" monitor, and only run at 1024 anyway... so no problem. If I had it all to do over again, I'd probably skip the card and get one of the twin-view Geforce 2 MX cards. I bought one without twin-view when they first came out and love it... now twin-view is available... the price of the geforce I bought plus the hollywood plus is close to the twin-view price... but 20/20 hindsight is always much clearer than reality.