Hollywood+ can only do DVD or Mpeg movies. It doesn't work like a vid card with tv-out for games or desktop text/graphics.
Any video card that has tv-out is limited by the quality of the tv so any video card will not look that great over a tv. Tv's are high color, low res generally unless you get a HDTV, but then the card may limit the amount of lines you can view. I know most cards will only output 800x600 onto any tv(some are now at 1024x768) but the refresh rate sux too on most tv's.
I'm not sure what the quality output for a Radeon 8500 would be, but if your tv is crap, it will still look like crap too. Keep text on a monitor, movies and some games on a tv if you want a larger viewing area.