My 5005 (Nov. 15, 2004) is working like a champ.
I'm coming at this from the viewpoint of one who edits video, and am used to how it looks and works.
I use Matrox RT.X100 realtime systems & Premiere Pro for event videos (weddings etc.) and have used many MPEG-2 encoding schemes ranging from hardware encoders to the Ligos and MainConcept software cores.
It's average Q (quantization) of 4-5 is rather good since typically this is 6 or higher (lower = better). Basically this refers to how much of the original streams video data is tossed before the MPEG encoding of a given segment starts, this in an effort to reduce its workload.
The 5005 uses a DC precision of 10, which is the highest legal setting for MPEG-2 video used on DVD. By comparison most MPEG encoders default to a setting of 8 or 9. DC precision is how accurately the encoder calculates the discrete cosine transforms used to compress the video stream after quantization.
As a result the 5005's MPEG-2 streams are as good as what most encoders used in editing systems can generate, and are better than some.
The only things really lacking is the ability to use DVD-RAM, support for which is advantageous in the editing bay, and the use of Dolby Digital (AC3) audio. I can understand the lack of Dolby though since licensing it would probably cost almost as much as the 5005 itself
On my entertainment system I'm using a satellite receiver -> JVC SVHS -> 5005 -> Sony WEGA. Connections are S-video from the receiver to JVC and from the JVC to the LiteOn and the component output to the WEGA.
Uppance: I'd buy another one for entertainment use, but prefer Panasonics in the editing bay for their DVD-RAM capabilities.