With the phone vertical and you tap the playing video, top right hand corner is an outlined box, that makes it go full screen.
If you notice the video does not go to the end on both sides, but if you tap screen again you will see the progress bar at the bottom does.
This shows that Hulu is aware of the screen size but is not formatting the video to use the whole screen. My Guess is its a ratio thing, if they make it stretch to the ends it will look funny. Just a guess.