Radeon cards up to the 6000 series should work. The highest one I've tested is a 5750, which works fine. mplayer works on it, although I don't know whether it takes advantage of video features. I have not used xine, nor have I actually tried the HDMI output.
I got an nvidia card working with the driver, but once I start X, I can't log out of it or go into any of the virtual terminals. The hdmi monitor just has a signal loss and I have to press Alt + F9 to get back into X.
It won't be fixed on the old console drivers because they can't be adapted easily to interract with the KMS drivers. Instead, there's the Newcons system that is still under development but is already quite usable:
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