I have owned the WDTV Live since November. The main reason I chose it over the other boxes at the time is that there was already custom firmware released. I like to hack embedded gear like routers and players like this so it was a good fit for me.
The live uses the sigma 8655 chipset . This same chipset is used in DVR and blu-ray players . It can decode 2- HD video streams at one time , each with their own 5.1 audio streams , WD has not enabled that for consumers but it gives you an idea on how good the hardware is. Playing back a single 1080P video the hardware doesn't even break a sweat. Onboard is DDR2-667 512MB ram , of which the box leaves over half free so it isn't starved in that area either.
It can play back any industry standard H.264, Xvid/Divx, AC3 file.
After using it for about a month I disassembled my HTPC. The reason was that I can plug in this box, connect a hard drive to the usb port and play back my videos in under 5 minutes. I don't have to mess with codecs, updates, or drivers, it just works. The other thing is the video scaler in the hardware is superior to any video card output I have seen. I was watching video and thought it was HD in size , but when I checked the info the details were : 624x352 , 1117Kbps, 349MB total size.
I tried to duplicate the result with a PC and a ATI Radeon card using scalers like lanczos ,etc and it was either blurred more or too sharp making artifacts stand out. The Live has just the right combination.
The other thing is the custom firmware. The Live runs linux as the OS. After you install the custom firmware you have full access to most of the internals. Want a bit torrent client running, install it. Want it to download and process usenet , install it. Want to change the remote control functions , change it. There is an active home brew community developing and more is being added every day. The live does all the video processing in hardware so the cpu spends most of its time just handling loading of files and processing the network, so even with torrent , ftp, running video playback is unchanged. Installing the custom firmware takes about 2 minutes, put the files on a usb drive and power on the box.
One last thing I like is the power usage. The most the box can ever use is 12 watts. With an external HD my setup maxes out at 17 watts while playing back video. HTPC can't come close to that.
Downsides:
The internet interface is 100Mbit . This limits Lan transfer of files to aroun 11MB/sec . If you are sending a file to an external drive this can take longer than I would like.
Out of the box retail the networking setup is not that great. Windows 7 seems to have issues with getting file sharing working correctly. Install the custom firmware though and you can customize it for any network that exist, including cifs, nfs, etc.
The remote is really small and easy to lose.
No volume control on the box itself.
Some problems with formats like DTS , depending on the file.
Custom firmware:
http://b-rad.cc/wdlxtv-live/
Features
external dvd drive capability with cd-manager-0.7
Web Server
Python, Perl, and PHP
Deluge Bittorrent client w/ web interface
nzbget NZB downloader w/ web interface
SSH server
Telnet server
FTP server
NFS share mounting in local folders and Network Shares
sshfs for mounting a remote server as a local directory
curlftpfs for mounting remote FTP server as a local directory
unionfs for consolidation of multiple directories/locations/servers/etc as one entity
patched samba configuration for better detection of Windows shares
user customizable background & screen saver images (3 backgrounds to choose from)
extra subtitle size options of 44, 48, 50, 56, 60, 64, 68, 72, 76, & 80
selectable 4/8/10/12/21 video thumb view (see Changelog)
selectable 4/6/8 file list view (see Changelog)
sleectable 10/15 photo/music thumb view (see Changelog)
ext2 & ext3 filesystem support ** (un)officially supported now **
device hotplugging
all media (including network shares & optical devices) can be viewed in ‘All Videos’
USB Hub support
mounting of app bin packs (if available) at boot, for plugNplay addtional functionality
mounting of OSD overlay (if available) at boot, for full theming
user customizable init.d scripts for full os customization
emergency flash recovery
many, many additional system binaries and related tools for power users.
probably more I’m leaving off…