Reminds me of when someone sends me an email and put what they want to say in the subject and leave the body blank. Annoying.
I think the quality (downloaded) of the SD movies is a bit over compressed, but it's not terrible and doesn't ruin the experience. For the file size it's pretty good, IMO. I put a 1080p video my Galaxy S2 recorded onto the N7 and watched it, and it looked great. Of course it's downsampled to the 1280x800 resolution of the N7, so it's bound to look good, but at least I can tell that the screen is capable of showing fine details so long as it's GIVEN those fine details.
I will buy an HD movie and download it to my tablet after pay day and see how that looks. I'm in no way going to be upset about a $225 tablet not being able to provide me a crisp high definition video experience. I probably won't be buying ANY movies in HD in order to save space to be honest. Unless Google threw in SD versions of any video you buy in HD...