I had no problems playing a 10gb 1080p film from a 750gb HDD yesterday. Stock rom, only busy box, su and stick mount. Format was ntfs, drive was a 7200rpm 2.5 inch with no external power. It seemed to pull enough power off the otg to spin at full speed, skipping through the film went as smooth as for local files.
It did seem to drain quite a bit of power tho, but that could've just as well been the screen.