I just recently went through something similiar as OP.
I've always had some version of PCLinux on my old bedroom PC for surfing the web but I was using windows 7 for my HTPC.
I wanted to switch to linux & boot off USB ever since I got a blu-ray with netflix (the only reason for being on windows)
I first went to PClinuxOS & after some struggles got my Radeon HDcard working with audio over HDMI!
But XBMC & Boxee kept locking up hard on me.
So I must of downloaded a dozen different distro's & couldn't even get them to boot into X after I installed the proprietary ATI drivers.
so i figured it was just ATI.
I put in my nividia card & still couldn't get to a desktop with the driver installed.

Heck most wouldn't even boot into X off the liveCD.
Very frustrating.
I came back to PClinuxOS (openbox edition) because that at least didn't break when I installed the drivers.
But using my nvidia card this time around (8400GS) and it just worked!
i'll upgrade to a GT for audio over HDMI in a little.
I plan on remastering my install to boot off USB & using an old PC in my basement as a media server & possibly a mythTV server however with boxee,xbmc, & hulu desktop I really don't need to record TV unless it's HD off the antenna.
I'm not trying to sound like a band wagon jumper here but honestly, what is it about PClinux OS that proprietary video drivers just worked when pretty much installing them using every other distro's official method broke their OS?
I don't get it. I suppose it could be just my particular combo of hardware.
anyways thanks for the great work.