I am using a 7205 on a 110" screen. If you plan on using an ATI, ffdshow might help but with the superior scaling abilities of the Nvidia 6 series cards, yes, IMO ffdshow can be beat. Yes the decoder will help if it is decoding correctly as the NV4 is. Displaying at ~48 Hz vSync also helps a great deal, as does having the entire chain properly calibrated for brightness, contrast and color. For about the first half hour or so, I did a "down and dirty" calibration. The decoder was out of the box almost there. For my display the brightness was a little low as was the contrast. Saturation and Hue were almost dead on perfect. I haven't even gotten to the digital vibrance thing.
One of the things I did check was if the new 4x decoder would interface seamlessly with ffdshow. It would. At 110" the difference between an all software chain and all hardware chain was like night and day. FFdshow looked fake and "edgy" to me. This was using Lanczos resize L1 C0 to 1280x720 with Denoise 3d set to fast. Using virtually all hardware was smooth with natural detail that wasn't pushed.
I played a little with the AA setting in hardware mode and found that there wasn't much of a difference between the 2Q mode and keeping it software dependent. Much above that started to blur the picture. Turning it off was unacceptable. Turning AF to the much touted 16X was completely unacceptable as was turning it off. I kept the software dependent mode there as well. In other words, the 4X decoder appeared to be setting things on the card just fine.
If you like an edgy picture, then okay. I prefer a smoother, and IMO a more natural picture with detail and depth. The NV4/6800 combination gave me plenty of it, and in more than a few spots I was saying, I never saw that before.
I don't hear all that many people commenting on whether they actually display at 48 Hz. If you think that "Judder free" is the only advantage, think again. Having the display chain correctly displaying a 24 frame cadence also adds to a "sharper" image.
With the NV4x decoder and everything working as above, I had the most natural, lifelike, and theaterlike presentation I have ever had, being displayed as it was intended.
If you like the combination with ffdshow then fine. I did not, and those wanting an excellent alternative to ffdshow, finally have one with this decoder and its DXVA interface with the 6 series cards.