I pay for Dish Network (in 4 years the price went up once, by like $1 a month, and there have been plenty of channels introduced since I signed up), and DVR, so I tend to DVR everything I'm not around to watch live. It works just fine for me, I only pay like $80 a month iirc and that includes a 2-TV DVR and a standard box for the guest room.
Hulu and ABC look bad enough on my 22" screen. On a 40+" HDTV, it's going to be abysmal. If you're totally dead set against paying for what you watch, just download 720p TV shows off
mininova or something onto a basic PC. I guess at least a 1.8GHz dual core, 2GB RAM, and a halfway decent video card would be all you need. I've got a dumpy little Intel GMA 950 64MB video card and I can run 1080p videos just fine so long as I'm not doing graphic intensive work at the same time.