I have the Hybrid, and it works ok. I have the cheapest evar HDTV antenna, and I usually get about 1 short (less than a second) signal corruption per hour (I've only had it for about a month though). As I understand it, you can also use a normal rabbit-ears style antenna, but I don't have one to confirm or deny.
You'll be pleased to know that the software compression issue only applies to analog input. If you're interested in HDTV, it's compressed by the broadcaster and no compression or processing at all goes on in your house (antenna, eyetv or cpu). The reason they list higher system requirements for HDTV is purely for playing it back.
I was a little wary of the analog software encoding as well, but it's pretty decent. It encodes in all keyframes, and there are 2 quality levels to choose from (I use the higher quality setting). The first few seconds of the recording are terribly pixelated, but after that it really settles in and the quality is near perfect from there on out. The image degredation is certainly far less than the fuzziness I notice from it not being HD
