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It uses IRC instead of a proprietary client and protocol.

It is based on IRC, so you can seamlessly use Adium, etc. to use it, in addition to the web client.

In some ways that feels limiting. Hipchat can embed images, videos, and files. Are these things possible over IRC now?

That's not a distinguishing feature (HipChat works in Adium too)

It is, because there are a number of popular IRC clients that don't support XMPP.