I just recently hacked my WDTV with ext3-boot and an Airlink USB to Ethernet adapter. I was able to get the WDTV to see my Buffalo Linkstation Live NAS.

I have a Buffalo 54g router with DD-WRT on it and by my TV I setup up another Buffalo 54g DD-WRT in Client Bridge Mode. I then plugged the WDTV to the network.

I have some MKV's on there that are 720p rips from BluRay. I was expecting the movies to stutter while watching it on the WDTV. I was surprised that throughout the whole movie I had no stuttering or interruptions.

I don't even have wireless N and I can now watch HD from my NAS!

Will have to try a 1080p rip to see how it does.

1080p rips should work fine also, as long as they don't have very high bitrates (e.g. 1:1 copies of the Blu-Ray video stream). High bitrate Blu-rays will be too much for the (unofficial) WD-TV network feature though, especially over WLAN.

I agree that it would be too much for WLAN but with a good USB-LAN adapter and tweaked NFS settings you can achieve 60mbps which is enough for a Blu-Ray stream.