i love xmbc. i bought an xbox just for that.
even at 1080i the menus are so crisp and nice. it skips through things properly, mounts over samba and plays ISO files like native disks. it basically supports all video formats i'll ever care about in the near future too.
except when i try mkv files and such it definately shows the weak processor, it's somewhat noisy too. i don't understand why it has taken so long for anyone to make an xbmc port for linux (or even windows) - i mean, mplayer already runs natively on linux. i would think it would be more difficult to make xbmc run on an xbox due to the proprietary executable format, not vice versa!
when i asked on the xbmc for linux channel they basically said "it might not even work for what you want" so i haven't really bothered yet. but mainly just divx/xvid/iso playback with samba mounting support (and normal skipping controls) is the majority of what i care about... and of course a remote control that makes sense (would be great for DVD navigation, it's a little funky right now on a normal xbmc)
those requests shouldn't be too hard... it sounds like it wouldn't be too difficult to try it out on my own though, but i wanted to try using at least 1080i if not 1080p, and i would need to get a decent video card for that, not to mention a PC that would fit it (i don't have any pci express boxes, all mine are 3 year old shuttle XPCs...) - so that's been another reason.