Don't worry, other devices in this size class won't play 720p MKVs either - Android devices have only just gotten decent DivX playback, and that doesn't even work on first-gen devices at all.

Hell, even my Moto Milestone struggles with DivX on Android (somehow I get the feeling that Android is very inefficient for stuff like this), even though it's got the same CPU as the N900... So count yourself lucky