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If I were to use Ubuntu 10.04 (so Gnome desktop or possibly, LXDE) and latest FOSS driver and switching to latest FGLRX when required...to use MPlayer and play DivX/Xvid/MOV4/HD files.
2) playing Youtube video - streaming video
Potential Hardware: HD 4850 and HD 4770 (maybe no difference in experience???)
In my experience for switching from radeon to fglrx only a logout is required as that will restart the xserver. For switching from fglrx to radeon a reboot is required, just logging out locks up the system.