I've always liked and, for most playback purposes, recommended ProPlayer (AppStore link). While it isn't exactly feature-packed (you won't find, for example, audio, saturation or brightness boosting in the app), it has (generally) a well-behaving and -performing set of video and audio decoders. Most of these decoders are exactly the same as in AVPlayerHD, one of the best iOS multimedia players.
The latest player update description boasts “Hardware acceleration” and states the new version is "a major feature update":
Well, I need to report that this new “feature” is, in practice, just a new switch in the app (fortunately, it's “ON” by default resulting in decent Full HD video playback performance “out of the box”, unlike with some other players), annotated on the next screenshot:
So far, you couldn't disable HW decoding (as you could also spot in the “Hardware playback?” row (just under “MP4/M4V/MOV Container support”) of the chart of my work-in-progress Feature Chart of my forthcoming Multimedia bible); now, you can. You will need this in some cases like selecting the embedded subtitles or audio tracks – but strictly for non-Full HD videos.
Now, the new version, plays the embedded subtitles in MP4/M4V/MOV files in both hardware-accelerated and software decoding mode on both the iDevice's screen and an external TV set.
(BTW, as you can see, the title of the switch is in German. The devs may have forgotten to translate it into English?)
Now, for the bad news.
I've thoroughly tested the player with my test videos and found out that “Hardware acceleration” is nothing else than the above-shown switch allowing for switching acceleration off. Behind-the-scenes, runtime MKV remuxing into iOS-friendly MP4 / M4V / MOV files, with DTS / AC3 audio conversion to AAC if needed, just like in It's Playing, BUZZ Player (of these, please see THIS) and some other players? Nope. ALL the decoders are exactly the same as before; therefore, what I've stated about, say, WMV playback (see my WMV bible) remains still topical.
TV Out has, on the other hand, been enhanced. The previous version had sub-par TV out support (while most top players support 1080p output, it only supported 720p). Now, while Settings > TV Out Resolution still doesn't have a Full HD menu item (the highest is 720p), if you select 720p, Full HD videos will be played in 1920*1080 in both hardware and software decoding mode, including textual subtitles. (Incidentally, while the player doesn't render full-resolution content on the iPad 3's screen in SW decoding mode, the TV output is truly Full HD.)
Also, there's support for subtitle repositioning. This only applies to textual ones (including embedded ones), not bitmap ones. Speaking of (embedded) bitmaps, the one-bit problem of DVB TS subtitles remains, which completely ruins TS MPEG2 DVB playback (while, otherwise, the TS support of the player is pretty good - exactly as good as that of AVPlayerHD, with exactly the same subtitle bug).
All in all,
while the updates pale in comparison to what have been done to It's Playing and BUZZ Player (again, I recommend THIS for more info on these recent changes), they're highly useful. ProPlayer has become even more recommended.
(UPDATED the article on 06/09/2012 after testing TV output.)