It seems to work for drivers. Storage subsystem drivers still want you to reboot though... but graphics drivers don't
That's a different beast. Graphics drivers don't require a reboot because starting with Vista it is possible to restart them. You can try that for yourself: go to device manager and disable the video driver. Notice how the screen goes blank (and you might see a text mode cursor flashing) and after a while the desktop reappears but using the generic software driver. And of course, you can re-enable it and get back to normal hardware accelerated mode.
As for hot patching: not all updates support hot patching and it's enough only one update that doesn't support hot patching for a reboot to be required. And I'm not even sure it applies to client version of Windows, all information I've seen on hot patching talks about server versions.