The major advantage I see with this over HipChat is that you can use existing IRC client software to connect. Personally, I'd much prefer Irssi in a terminal to an Adobe AIR product.

You can connect to HipChat from any Jabber client, though unfortunately it makes chat rooms slightly less discoverable. (I’ve used Adium with reasonable success.) The big advantage is that (at least on a Mac) the Adobe AIR version is a tremendous CPU hog.

I can see the reasons for that, but the HipChat application lets you drag and drop files to share them with everyone in a room, auto-loads images... that alone is worth the client app to me.

You can do that with the IRC client.

One functionality I miss from HipChat that I haven't found here, is the ability to copy files from your disk and paste them to the chat (or drag and drop), where they get automatically uploaded so all the chat members can view or download them. If Grove gets that, I'm sold.

Unless I'm missing some detail of what you're saying, HipChat already does that. I regularly drag screenshots into a conversation. Hipchat uploads them to S3.

There is a size restriction, though, which I've run up against more times than I can count, since I never seem to be able to remember that it's there.

What @napoleoncomplex meant was hipchat has the file upload feature, but grove doesn't. And he would move to grove if that was present.

that i can use any irc client i want and not install adobe air or use their web-based chat

You can use XMPP clients with HipChat.