I spent some time working with the WD TV live last night. I like this thing. Easy to use Netflix, Youtube, Spotify and play movies. I did play several .ISO and mkvs..all of them worked fine until I got to Avatar...then at some point, things went nuts...and the video and sound got out of sync. I had to restart the device afterwards to get any other movie to play correctly. I am attributing this -- until I can disprove it -- to the 100 Mbps networking. There are some high-bit rate movies that demand a bigger pipe than 100 Mbps. I think The Dark Knight is another. I was able to get through two other recent blockbuster films and a concert BD with no problems.
I do notice that this won't pass thru DTS-HD Master Audio....it only sees DTS and my AV receiver won't flag it as HD MA. It does pass through TrueHD in 8 channels. I'd love to be wrong on this, however. I'm keeping this little box because 1) it only cost $40 and 2) it's a nice backup player if my other players are down. I'm thinking of making up my 3 blu-ray players and selling them.