It plays the Big Buck Bunny 1080p MKV fine, just like it did when they first showed off XBMC on RaspberryPi all them moons again, but a large number of TV releases I've tried just don't cut it. The biggest problem I seem to have with mine is with audio sync. I wouldn't mine if it was predictably always out by the same amount, I could adjust XBMC to delay the audio, but it's not.
I don't pretend to understand what the problem is, I guess the TV release community isn't as stringent with their encoding as the Buck Bunny guys were.
XBMC 12.0 Frodo has just entered beta 1 and has official Raspberry Pi support. I might try that, see if it fairs any better than RaspBMC.
EDITED: 24 Nov 2012 13:28 by MATT