I got the bright idea to exploit all that HDD real estate on the C7 by loading it up with media files. Unfortunately, Chrome OS's local video playback failed to impress me. My testing was limited to the AVI & MP4 containers, standard definition video (DVD resolution) and mostly XviD & MP3, so other formats/codecs might fare differently. In addition, I readily admit to being an obsessive videophile, so my expectations are very high. In fairness to Google, I must also say that my opinion of Ubuntu's OOTB video playback is similar.
However, I can report that XBMC can be installed on Crouton and it works beautifully (at least for me)! I would expect other media players to perform well too, but haven't yet confirmed this myself.