totally late to the party ... but i just setup my first XBMC on an original Xbox. been trying to muck around with as many features as possible, so i haven't gone deep on anything yet. overall, for SD content, its AWESOME! the CPU isnt really powerful enough for HD content, but it just so happens most of my content is currently SD. as an end user, it puts the xbox 360 upnp / extender experience to shame.
UI - better than 360 and way better than PCH (Popcorn Hour). it looks good and is easy to navigate large collections. there's tons of different views. only negative is that the UI periodically freezes on me. this happened relatively often during setup, but now that i'm mostly using it for playback, its happening alot less.
videos - the 360 plays about 33% of my content, PCH plays about 66% (although its getting an update this month which should bring it closer to 80 or 90%). excluding HD content, XBMC plays 95+% of my content (even OGG and FLV). its container/video/audio codec support is incredible. during playback, its got tons of options for skipping around too. one negative is DVD playback, the PCH has much better ripped DVD support (loose VOBs and menu support).
music videos - the 360 sucks at music videos because of limited codec support. PCH has the codec support but you have to use a specific UPnP MediaServer to generate a shuffled playlist. XBMC can just generate a playlist from an SMB share and then shuffle it .. excellent. it has some ability to create a metadata lib for music videos and a party mode ... but i havent had luck getting that to work. not a big deal.
photos - XBMC supports image archives and comic book archives with zoom support! i had to write an app to get zips into MCE and on the Xbox as well as a UPnP service to get image archives on the PCH.
music - the 360 sucks because it doesnt let me skip or fast forward within music. so if i'm listening to an audio book or 60 minute mix you have to start from the beginning. within XBMC, you can fast forward using the remote and skip around using a game controller. the PCH is better, because i can hit the 1-9 button to jump from 10-90% along with 30 second skips. i might be able to get this to work in XBMC by setting up the remote differently.
games - tried this out for kicks. easily downloaded an Xbox game and transferred the iso contents to the harddrive. sure enough it played ... but i'm seriously addicted to achievements on the 360, so why the hell would i play a game without achievements. also found a couple emulators and tossed those on. load some ROMs ... sure enough they work. they just look so freakin old ... once again ... achivement whore.
scripts - 3rd parties can create scrips for accessing websites like youtube, google images, internet radio, internet TV, simples games, movie trailers, etc... tried a couple and they are decent. i'd rather have a browser on the xbox 360 that uses its keyboard attachment that hooks to a 360 controller ... that'd be awesome in the living room. of course the 360 would have to radically improve its codec support.
setup - its kind of a pain because you have to hunt for the files you need (for the xbox). since the original xbox isn't even being sold by MS anymore, why would MS even care about it being hacked?
cost - ($149 total) $60 used xbox (30 day warranty), $10 used dvd controller, $15 used component cable, $4 used memory card, $2 used spliter cell game, $15 used wireless controller, $20 action replay kit, $23 XIR easy kit.
unexpectedly, XBMC is now my primary media player. PCH is the secondary player for HD content and networked DVDs. Xbox 360 is now just a gaming device and a backup for the random HD files the PCH has trouble with. NOTE the PCH is expected to get a firmware update soon that will add new video/audio codecs ... but its main problem is still the UI, its just too slow for navigating large libraries. since XBMC has great music video and image archive support, i can now remove MCE from my media setup altogether. now i'll just have NAS devices for storing content and STBs on the TV.