It will integrate into the dashboard like Netflix has done, with a subscription model most likely. Hulu is for US users only with all others blocked.
"We’ve heard from a very reliable source (who has never been wrong before) that Microsoft is set to unveil Hulu as an Xbox Live service at E3 2010," reports . Naturally this move wouldn't be done freely so a subscription will be required though pricing is MIA.
In the UK the Xbox 360 has teamed up with Sky Player which also requires a subscription, both with Sky and Microsoft for the TV package and Gold Live membership. How much of Hulu will Xbox Live get access to? That is unknown - it could be all of it.
Microsoft's E3 2010 press event starts June 14th at 10:00am PT.