That applies the set of devices using things marketed as "H.264 decoder" chips. They usually are some oddball semi-proprietary thing that comes with magic microcode blobs. It's still software, but not something the general world knows how to program. So my "anyone can fix it" doesn't apply. You have a good point there.
The WDTV, a kind of media playing set top box, is an example of a device using a blobby playback engine that could almost certainly play Theora if the maker of the chip cooperated. Some folks are trying to convince them but I suspect that they'll need to improve their Chinese skills and order a few million chips before they get a return email.
Though, in many devices that people care about and can expect to get firmware upgrades for (i.e all(?!) current generation mobile devices) the decoding is done on a fairly conventional chips simply because the device is used for many purposes and thus needs a fast generally programmable CPU/DSP anyways which makes the parts count for a dedicated decoder unjustified. We can program these. It's just a question of someone sitting down and doing it.