Well just had a play with one first hand. My mates has just arrived here at work, and as we are currently setting up the new CCTV, we have an LG 42" plasma to test it on !
We threw some 1080P Apple trailers at it, and it looked stunning.
We are trying various file formats and so far it's been excellent. I even tried an Xvid on it. 3/4 hour length video with a file size of around 350 meg. Honestly expected it to look like youtube, but it was much better than I thought.
ISOs are a bit weird, they play fine, but seem to miss the menu. Currently ripping a DVD to test this further. So far so good.
If your mkv has a DTS soundtrack though, it will not send it through the HDMI cable, it must go via the optical out and into a surround amp.