Though it varies significantly from program to program, overall we were very impressed with Hulu Plus' image quality. Shows like "Lost" and "Arrested Development" were comparable with what you'd see on an HD cable channel. There are very few compression artifacts on shows listed as "HD," and even a room full of picky CNET editors agreed that it looked "good enough." That's impressive, especially considering we were watching on a 58-inch plasma. We did notice that some shows, such as "Parks and Recreation," seemed to be considerably softer overall (even though its listed as an "HD" program), looking more like DVD-level image quality with occasional jaggies visible. Like any streaming-video service, image quality also depends on your Internet connection and home network.
As a side note, image quality purists will also note that Hulu Plus doesn't completely fill the screen if your HDTV is set to "dot-by-dot" mode; there are very slim black bars on all sides of the image. It's easily fixed by switching the TV to a mode with slight overscan (on our Samsung PN58B650, it's called "16:9"), but we would prefer a true screen-filling picture. Still, that's a nitpick, as we didn't notice it at all once we switched modes.