A 2.7-inch LCD is about the smallest you can get away with on an HD camcorder, but it remains viewable in direct sunlight and from multiple angles. The eye-level viewfinder is almost too small, and its hard plastic eyecup isn't very comfortable to use.
The 10x zoom lens integrates Canon's SuperRange Optical Image Stabilizer, which tweaks the stability by providing continuous feedback to the system. I find it works very well; better than most out at the end of the zoom range. Canon's Instant AF uses a rangefinder approach--it bounces a signal off the subject to provide the AF system with a rough location, so that the lens hunts for a focus lock over a smaller area. You can turn IAF off when it's less useful, generally in low-motion scenes such as talking heads or school plays, in order to save battery power. The IAF makes low-light focus lock a hair faster. Although it still pulses slightly, I think the low-light performance in general--focus and video quality--is a bit better with this model than I've seen on previous Canon consumer camcorders. It also has one of the most comfortable zoom switches I've worked with in its class.
Audio doesn't fare quite as well. When the windscreen filter is set to Auto, the built-in stereo microphone records sounds from behind it very well, but voices coming from in front sound muffled and conversations to the side barely register at all. It records better from the front when the windscreen is off, but the camcorder still seems to have a rather limited range--about 3 feet or so--and no zoom mic capability. Nor are there are any input volume controls. There's a mic input and an accessory shoe for a better--albeit extra cost--audio experience.
There's little to complain about on the image quality front, however. The HG10 renders well-exposed, saturated, and sharp video and photos. There's some visual noise and softness in dimly lit scenes and blown out highlights in bright ones, but no more than usual for this class.
I dinged the Canon HG10 for its frustrating ergonomics and audio performance problems; before you buy, you should try it to see if you feel the same way about the control layout, especially in light of the Sony SR7's underwhelming touch-screen alternative. If the audio issues pose a serious problem for you, then there's either an external mic or a touch screen in your future.