So I have a 23" widescreen monitor that can do 1080p. What if I had a 30" monitor? Would Hulu want to block it then? What if I have a 50" monitor? When does it turn into a "TV" that Hulu would block?

When you put a couch in front of the monitor. Then it becomes "TV"

Try writing the Terms of Service for that. "You are authorized to watch Hulu on a computer monitor up to 30" in size. You are not authorized to watch hulu while sitting on a couch, or in the presence of more than 2 people, or with munchies."