I've heard about changing hardware and such but never experienced it myself. While all my evidence is anecdotal, it suggests that reactivation is successful (while inconvenient). I've changed graphics cards twice, added a hard drive, and replaced both DVD drives in my machine while never having to reactivate, so I don't know.
It's my understanding that activation is tied to a BIOS checksum and your MAC address. If both of them are different your license has to be transferred.
I changed a hard drive and had to reactivate XP. It wasn't too big a deal, but I did resent the attitude of the MS rep. It was clear that the presumption was that I was ripping it off and that it was my job to prove I wasn't.