I used to teach the HOP program to 4-5 year olds and some schoolagers, and it does work. It can be boring, but 4 out of 5 kids that I taught really looked forward to the lessons. I've also seen schoolage children who were failing reading make significant improvement (like reading at or above grade level in just weeks or months).
We would use the tapes, workbook and HOP books, then once the child mastered those sounds we would find a well known book with those sounds (like Dr. Seuss) and read it together. I added lots of other activites to make it more interesting as well. The workbooks also address frequently occuring sight words that can't be sounded out. There are flashcards for this.
To determine if a child was ready for the program, I showed them all letters of the alphabet (upper and lower case, not in alphabetical order) and they had to tell me the name of the letter and the sound. If they got most of these right, I'd start with Level 1. If they didn't know most of the letters, they typically wouldn't do well in Level 1 and we'd just repeat lessons on letters and sounds. It's also important for them to know the short vowel sounds as that's what HOP starts with. The program we used came with a computer CD and the kids really loved it.
I'm also struggling with buying the HOP program. My son (4) has known his letters and sounds for quite some time, but I'm not sure he'll sit long enough to do it. He started PreK this year and they'll be eating their way through the alphabet (phonics based) so I'll probably hold off on buying the kit. There is a website
www.starfall.com that has phonics activites. If you've never tried it you might want to.