Interesting...1.3 won't actually play any videos for me.
I tried the 1.3 from the link I posted, and the official unmodified app from the Market (D2 is not supported) and in both cases I can select a video, but after displaying the full-screen "Netfilx" screen like it's going to start playing, it goes back to the movie browsing window.
I reloaded Netflix 1.2.2 and it works fine.
Anyone else able to get 1.3 to work on CM7? If so, did you do anything special?