Yah. I say watching movies on the phone is a "band-aid" solution, even if you use a secondary display. I'm trying to use the term "band-aid" in a positive point of view here. Like when you don't have a big screen or WiFi nearby, but want to check out quick Internet video or want to kill time for a short period of time. I mean, it is not too practical to watch series of movies on a phone. Screen is still small, battery runs out fast, you may get phone calls or text, etc. Video is decisively a secondary function of a phone for me.
High-quality 1080p/H.264 rips (read: from the "scene") are 10 Mbps+, and easily over 10 GB for a 1 hour footage. More reasonable quality that iTunes, Google Play, Amazon, etc,. sell is 3~5 Mbps, and still going to be ~2 GB for an hour. It's unrealistic to use a phone for your media library.
My current set up is to use a 8 GB Nexus 4 acting as a phone/modem/email and other real-time stuff while using a 32 GB Nexus 7 with Stickmount for consumption and app testing. With T-Mobile's $30 unlimited plan (HSPA up to 5 GB) serving both the Nexus 4 and 7 via N4's native tethering, I am enjoying my setup immensely.
My next step/goal is cloud storage. I am looking into a personal solution instead of relying on 3rd parties. Not sure whether it's possible or is within my capability, but it is going to be fun.