I think we need a different terminology when talking about displaying any type of captions, closed, decoded, or subtitles on the HDMI interface. There simply IS NO method to transmit closed captions on HDMI, period. If you see captions, or any kind of text, it is being superimposed on the video signal. On further reflection, there's no way Microsoft could change that, at least to have it work with a standard HDMI television (*). If the software is putting text on the signal, and you see it on your HDMI TV set, it really isn't closed captioning, but rather part of the video. A simple test I ask myself is this: if I wanted to, could I turn OFF these letters at the TV set?
So your Microsoft Media Center, there really isn't anything proprietary - they're just decoding the CC signal, and overlaying the text onto the video before transmitting it on HDMI. For me, I would like to know if their analog video output, on a computer so-equipped, can transmit the Line 21 signals. Or is it always overlayed video? I have read that there are some such video cards available that support Line 21 encoding, but haven't tested any.
Back to the nomenclature, in my project I have to distinguish between closed captions, decoded and displayed open captions (essentially permanently overlaid onto the video signal), and subtitles. It's very good to know that the PowerDVD player lets you choose to display either the closed captions or the subtitle tracks. Especially since the CC text usually contains a lot of non-visual cues, unlike subtitles. I'll have to keep that PowerDVD player mind.
(*) technical aside - I believe there is now an optional auxilary ethernet interface over the HDMI link. So theoretically a company might be able to encapsulate the CC data into ethernet packets, and send them to the TV that way. However, that would require a special TV that knew how to decode these ethernet packets and display them. I really doubt Microsoft is doing that.