If you want hardware decoding, then you can try one of the Android images that mattrix modified for better launcher, better SD card mounting (with some advice from me) and different initial app collection which includes XBMC. Then you can install MX Player and its codec pack for "(ARMv7 NEON)", and finally you copy a suitably edited "playercorefactory.xml" file to the folder "/sdcard/Android/data/org.xbmc.xbmc/files/.xbmc/userdata" using a file manager.|
This will allow you to use the XBMC GUI to access local or remote media for playback, which is then performed by MX Player using its excellent hardware acceleration.
I do this but also with the addition of a PlexBMC addon, so I can access my full Plex media library, just as with other Plex playback clients.
Of course, the Android multitasking and background services do steal some CPU time, and you can't expect miracles. But it does work fine for playback of my high quality 720p 'Game of Thrones' episodes, and I think it will handle most anything with a bitrate around 10 Mbps or less. But a 1080p movie I tried at 22 Mbps only played for a few seconds before locking up, so the limit probably lies somewhere in between.
Best regards: dlanor