From what I've read, it's certainly not *all* acceleration, only that involved in working with DVDs. From the article on Tech Report:
One of the things we learned during that briefing was that the video processing unit in the original NV40 chip, from which the NV43 is derived, didn't quite live up to its billing. The NV40's programmable video processor, you may recall, was supposed to be a dedicated section of the GPU, distinct from the pixel shaders, capable of accelerating both encoding and decoding of advanced video formats like MPEG4 and WMV. NVIDIA told us at the time of NV40's launch that the video processing unit was unique in the GPU world, and that dedicating transistors on the chip to accelerating video processing was more elegant and efficient than using pixel shaders to handle such tasks. However, NVIDIA wasn't able to get everything working as planned in NV40 silicon, so the NV40 video processor cannot fully accelerate WMV, just MPEG2. Instead, it has to farm out encoding/decoding work to the CPU, as GeForce FX cards did.
Hence the talk about the needing the "Nvidia DVD decoder" and new drivers.