1080p playback is fine however, playing from SD is not that much smooth.
Regarding your wifi dongle, I have tried to see if the kernel has this driver included then I compile it for you but it's not available in Roseapple Pi kernel (3.10.37). The driver has been supported and available in kernel version 4.2 afterward.
However, the MT7601 is using Mediatek chip so I have found a page that can guide you through installation and compilation of the kernel and firmware.
This page explained for Raspberry pi , but the process is same. The only difference is that the kernel driver mentioned on this page is for kernel 3.19 to 4.2 and newer than 4.2 and the provided link for kernel 3.0 to 3.19 has been depreciated.
By the way, for Roseapple Pi you can find and download the proper driver and kernel from here:
Then compile and install the driver. Remember that, your wifi dongle needs firmware also implemented into the "rootfs" as well.
Hope it helps,