Looking into the crappy Flash performance again. When using Hulu desktop full screen things start out a little jerky and over time it gets way too jerky to watch. If I switch back and forth between windowed & full screen it works fine windowed but really never gets back to the initial minimal (yet still crappy) jerkiness. Watching Hulu in Windows Explorer seems to be a lot better - it's always a little jerky yet watchable in full screen but never deteriorates the way it does with desktop.
Hulu in Windows Explorer:
And Youtube 1080: