Over the weekend I took the time to install the PlayOn application, which really only took a minute, and play with it a little.
The PlayOn program does work, and it does stream Hulu videos directly to the Xbox360. I played part of a few episodes to see how the quality was, and really it wasn't bad. It isn't perfect, and isn't HD, but isn't bad. It only took a short time for it to buffer, and after that it was smooth playing it back.
I also tried some of their other feeds, like from CBS and YouTube, both of which work just the same. Though, the quality on a Youtube is bad enough as it is when watching on their site, this obviously didn't make it any better.
While PlayOn does cost 30$, it also has a trial to it, which I think is 60 days. If nothing else, it is worth installing for the Hulu support for the next 60 days, and if they keep up development like they say they are going too, it could become a worth while investment...In the meantime, for something that took a minute to install, worked perfectly without having to do any tweaking, and is free for 60 days, it was worth the install.