The Nook Tablet has already been rooted:
http://www.engadget.com/2011/11/20/nook-tablet-gets-rooted-bootloader-stays-under-lock-and-key/
No ability to load custom ROMs yet, but the root is permanent. I don't know if this can switch off the 1GB limitation.
While it is...
I don't quite understand how this works nor why they implemented it but:
http://www.theverge.com/2011/11/17/2569132/nook-tablet-internal-storage-limit-1GB
Then again, if this limitation can be removed by rooting, it's not a big deal for the hobbyist/enthusiast crowd.
It's very likely the Nook will be rooted before it even hits the market. Obviously, there's nothing like an OOTB experience, and I am not saying that rooting is for most people, but if you are willing to root, you will get more out of the Nook Tablet than the Fire. Is it worth the $50...
If you copy the wmv version directly to the Android device, it will play using a 3rd party video player like MX Player (you don't even have to strip the DRM). I don't think that app is in the Amazon Market, so if you want to do stuff like that, a rooted Nook Tablet is a better bet (the sd card...