I just started using one of these:http://www.newegg.com/Product/Product.aspx?Item=N82E16814500033
Its a cheap ($27.00!), fanless NVidia 7300GT PCI-X card - 128 bit, 256MB ram. It works great in my hybrid. (Though it is a VGA/DVI combo card, so if you use VGA, you have to use a DVI->VGA adapter as the VGA still maps to the DVI port).
If you don't have a PCI-X slot available, I also am using both AGP and PCI versions of the following cards with no problems: (all of which ran UI2+alpha blending with no problems)
Geforce 5200 128MB
Geforce 5200 256MB
Geforce 5600 256MB
I use VGA connection on all of my cards. IMO, looking for cards or motherboards with component out and/or HDMI is a waste of my time. Component connections suffer from terrible overscan (which is not easy to correct with modelines), and HDMI has been flaky for some (due to driver support esp. when it comes to audio). Most flatscreens have a VGA or DVI input, and DVI->HDMI adapters work pretty well.
I'm pretty sure most modern cards will support hardware decoding.
Regarding your proposed setup -
the thin clients sound fine as MD's.. However, make sure you plan ahead with your core or core/hybrid. You would be suprised how much power you'll need when you get into streaming many streams at once, while recording shows with MythTV and ripping DVD's, and having background processes such as myth Transcoding, commercial flagging etc running in the background - amongst all the other stuff the core is responsible for. I would highly recommend something like an Asus M2n-SLI Deluxe with an AMD BE-2400 processor running LMCE 32 bit for the core. For the MD's, I also have some low-end machines (PIII's and even a PII) that run just fine. The worse one only has 256MB ram but works - though it is a little slow, so I would recommend 512MB for the MD's. While on the subject, at least 1GB for the core.