The latest version of the CyanogenMod open source Android firmware now includes improved support for the NookColor. The latest build has a number of bug fixes and it also has an improved video playing ability.
The firmware is available now on the CyanogenMod website, but it’s a nightly build, not a stable release. Only download this if you are willing to accept that it will have bugs. Also, if you download it you could break your NookColor and you will most certainly void the warranty.