I do a lot of those things, watch videos and play games on my nook simple touch. It's rooted with android 2.1. Here is a video of it playing Toy Story below. If you look at my other videos, it does weird things for a cheap ereader.
Since I made the videos there have been better apps for the refreshing . Maybe I'll update one someday. It now has a kernel that overclocks it to 1Ghz from 800Mhz, and all the games run at full speed. I do have a video of it playing nintendo 64 (super mario 64) but havent uploaded it to youtube. It's from the old kernel, kinda slow!
http://www.youtube.com/watch?v=M8MY26rwXuc