OK, since i'm quoted, I'll weigh in
The GX620 will play HD PVR files that have been compressed to Divx HD (High). That's what I do. I have not yet tested it, but will soon, but suspect it will play native files when running Windows 7. I've been stunned what my laptop running Win7 would do.
Now, if you're willing to gamble, there are USFF motherboards on ebay for $60 or so. For a little more, you can get a GX745 motherboard, which would slightly upgrade the video (but might not take the same CPU -- I don't know).
I recently needed a new machine and chose the Dell XPS Studio 540s. It's small, but not as small, but included both an HDMI output ATI video card AND a Blu Ray drive. More expensive at around $450 at the outlet, but one heck of a powerful machine. I like it a lot.
Tom