Unfortunately no hardware acceleration.

However, I think the answer is it depends on your video card and CPU. With my ATI 5750 I have no problems whatsoever watching 1080p YouTube or any other video for that matter. I'd imagine any mid-level video card and decent CPU will do just fine.

One thing to watch out for though, is acceleration gets turned on by default in new versions of flash if they detect a compatible video card. You need to shut this off before trying to watch a video or it may hang.