I actually had the same concern as the OP before I bought my TF101. And part of the reason for my concern was the demo units I played with at Best Buy/Frys etc. Trying to watch video on those units was an excruciating experience. The units were not updated to latest software, the in store wi-fi was slow as hell, and god knows how many people were screwing around with them and messing them up. So I went to this forum to ask actual transformer owners what the real deal was with video. Everyone told me streaming video from various sources works great. So I bit the bullet and bought one. And now heres my 2 cents after owning a TF101 for a few months: Theres not a video source I can think of that has given my unit any problems. Netflix, youtube, HD youtube, full screen video, and most importantly (and most CPU intensive) flash video. I love to watch the daily show streaming from the website, however it is in flash video format and I was concerned with how well flash content would run on the Transformer. But all concerns were erased the first time I went to the site and started a video. Frame rates were perfect, no stutters, no sync issues. And so I think that makes android tablets the only tablets that can play daily show episodes, Ipads obviously dont play flash.
So if you were thinking of getting the TF101, (or the new Prime) just do it. The original is now $250, which is probably the best deal you can get for a full fledged 10 inch android tablet. Thats only 50 more than the much less capable Kindle fire with a smaller screen. I am more than satisfied with my purchase, and thats after buying and returning an Ipad2 for the TF101. That says alot.