Hardware accelerated h.264 playback (DXVA2) is working for me using the system described in an earlier post (AMD 6850).

I used XBMC as my test bed.  There is an easy method to enable/disable accelerated playback in XBMC and you can confirm whether it is enabled by pressing 'o' during playback.

WIth hardware acceleration enabled, my CPU will be at 3-5% load during playback of 1080p video and it will be perfectly smooth.

When I disable hardware acceleration, CPU usage will range from 30 - 50% and on certain videos playback will skip badly.  I'm not sure why this is as the CPU should be more than capable of software-only playback.

I am also able to play games with native GPU performance, including three 1680x1050 displays running in an eyefinity setup.

I'm wondering if the DXVA issues that others were seeing are a simple driver or software bug that is completely unrelated to ESXi and VMDP.  I read that AMD had to update their display drivers after Adobe enabled DXVA support in flash.  For anyone who is trying to make VMDP work with DXVA and having troubles, I recommend ensuring that you try the latest versions of flash as well as your display card drivers (if you haven't tried this already).