The processor power of the T1 (ARM v7, 800 Mhz?) is quite sufficient to play SD videos, however you wil only be able to play Black & White (NO greyscale!) with it - however quite fluently. But as it may look artsy, you can't really watch movies with it.
You'll need
no refresh mode, and a Media Player like
MX Player with codecs for it.
There's a youtube video of a guy playing angry birds on it, so you can see what it looks like.