The manual or description nowhere says that this player can play HD video files. It do has HDMI output, and can output a 720p picture, but it is only for player menu and image display. Video playback is purely SD (1024x576 is not a HD, it's just native 16:9 SD).
I've tried various video formats, here's the results:
DIVX AVI (DIVX3-4-5-6) - All ok.
ISO MPEG2 (720x576) - ok.
SVCD (544x576, 480x576) - partially ok, while playback is smooth and in sync with audio, image gets distorted at regular intervals of time (approx once per 2 seconds).
RealMedia - I had some old, QCIF resolution files, thrown them in, plays them OK. Have no idea, how it will handle larger resolution files.
Quicktime (.mov), both small resolution files, and higher resolution ones (640x480x30fps) were played nicely.
While this unit plays standalone .vob files finely, it does not supports DVD menu, navigation or chapters.
The only one drawback I've noticed is oversaturated colors at HDMI output (haven't tried other ones). I have to reduce saturation on my TV from 50 to 30, when using this player, to make colors look normal.
Another con - in movies with AC3 audio, audio level is too low, and have to crank up it to max.
Another con #2 - while this device recognises flash drives and hard drives easilly, it does not recognises external DVD-ROM.
Overall, this is nice product, and for $20 price tag, this will be the quite reasonable purchase.
UPDATE: Found a serious flaw with this device. Contacted avermedia support, but no answer for 2 weeks so far.
When playing .VOB files, which have audio track with LPCM audio in it (most musical videos and concert recordings have LPCM audio), video and audio playback speed increases, hissing and chopping sound is heard, and video and audio came out of sync.