Let me start by thanking the WDTV engineers for supporting this feature. As far as I know, none of the competition does and it is probably the number one reason I am keeping my WDTV Live as my principal media player.
Unfortunately, while embedded IDX/SUB subtitles do work alright for some shows, with others there are serious problems.
First, the coded length of subtitles appears to be completely ignored for almost all subtitles. Rather than stopping when it is supposed to, the subtitle just keeps displaying for an indefinite period, often only clearing when the next subtitle begins.
Second, for some shows–in particular Japanese anime, it appears–90% or more of subtitles just don’t display at all. Every once in a while a subtitle shows, but the vast majority appears just to be ignored.
Third, and least seriously, but still annoying, the language of subtitles seems to be frequently misidentified. For example, English subtitles are routinely listed as Castilian (!?).
All of these problems appear on many or all of my DVD collection (stored in mp4 format on a ReadyNAS server). All of these files exhibit none of these problems when played on a computer using, for example, VLC.