you have to give up the mp3 player functions of it. I don't know if you are willing to do that or not. But you can install iPod Linux which has a video player on your Nano . Basically you are installing a customized version of Linux that runs on your iPod once installed on the Nano, iPod Linux will boot up and you will be able to install the iPod Linux video player which will let you play videos on your iPod Nano. You have to sacrifice quite a bit though in order to get this working,,,,,,,,
use the follow links to get the linux>>
http://ipodlinux.org/Main_Page
http://ipodlinux.org/project_status...
http://ipodlinux.org/video_player...
Hope it helpt ya....