It supports ALL formats. You have to convert any video that you want to use using the software they provide. So, I suppose it is proprietary, but it's damn simple and quick.

The new ipod only supports h.264 and mpeg4 period. Plus, you can't rewind and fast forward video with the ipod.

I forgot to mention ealier that this can also act as a host to other devices by allowing other devices to plugnplay with it and transfer data. And, you can record into it from any audio source using line-in.