I know this thread is old... but thought I would add. I use pclos on a variety of Acer ION based systems. One has the ION2 chip in it. I'm getting video playback corruption; like a tear, but it "zig zags" on the top of the video instead of being just a single horizontal line across the screen. Happens in xine, mplayer and vlc. h264 video. Same os, same video, same players, it's just fine on an older ION(1) system. So I think there is either something not right with the nvidia drivers or the libavcodec (perhaps?) libraries.
Setting modes, using a desktop etc., are just fine however.