how is the video playback on the n810? is it able to compete with the ipod touch?

The N810 can play more video formats than the Touch, I think. Not all videos play smooth, but with the right format, resolution, and bitrate, you'd get pretty smooth results. Most videos have to be transcoded for good playback, though.
As a rule of thumb, playback is well for low-res videos. VGA resolution (640x480) don't play well, no matter what file format.
The screen is better on the N810 (225 dpi, 800x480) than on the Touch so the videos should look better on the N810, even when it's 320x240 scaled up to 640x480, e.g.

If you want a good way to convert videos for the NIT and have them play well, consider using mencoder and xvid. Although, mp4 also works very well. I have a tutorial here on my site that'll give you everything you need for basic xvid encoding. If you want to use mp4, you'll need to change the command line options a tiny bit.

or you can just encode your videos with this program: http://www.internettablettalk.com/fo...ad.php?t=27217