I cut the cord about 2 years ago. I have an outdoor antenna that gets me all the locals in HD – and yes the HD over the air is not compressed, so its a better picture. I live at the top of a downtown building, so you definitely need to check your reception. One note: if you still get you internet from a cable provider they still have to deliver the local channels over your cable, so for Cox channels 1005 – 1011 are all the locals in HD, so technically you don’t need an antenna
I use a media center PC (with 2 TV tuners) for my main TV, so I can record and watch at the same time. I also can surf the web and stream anything I can find interesting (Amazon VOD, all the cable networks have free content on their websites). I get my internet service from Cox, The cool thing about still getting internet from Cox is that you can get any of the content from ESPN3 for free because you are still a subscriber. I also have a Hulu+ subscription ($8/month) so I can get most all of the cable shows that I want (Daily Show – Comedy central).
For my 2nd TV I have a Tivo which also has 2 tuners and is web enabled to get Netflix, Amazon, Youtube, and Hulu+. So if you don’t want to go with a full PC a Tivo is not a bad option. Yes, what you can watch on Hulu+ is dependent upon the device you are using, so on my media center PC I have access to all content because it just thinks I’m delivering it to a PC screen. On the Tivo (or Roku, AppleTV, GoogleTV, etc…) some of the content is limited. So my suggestion is to go with a PC and you don’t have to spend a lot of $$. If you have an old laptop or PC you can add a TV tuner pretty cheaply and it will probably work just fine. Oh, and unless you are an Apple user I would recommend a Roku or WD TV live device, they are cheaper and have more services than the AppleTV.