Generally speaking, both PirateCat and Wulf's story hours epitomize what I think comprises a good story hour. An excellent story, told well, with appropriate references to the actual game. Piratecat's story hour is usually more of a travelogue, describing the action from a 3rd-person perspective (and thus not colored by individual perceptions), whereas Wulf's is the actual opposite, a very personal perspective from one character on the game (and a very entertaining perspective, to be sure).
Game mechanics should be kept to the side, unless they're the subject of the discussion at hand. Discussing the use of a WindWalk, for example, is fine. Discussing the x.p. cost of creating a Heward's Handy Haversack is not terribly interesting to me. Both story hours have interesting running commentaries and rules discussions on the side. The best reason to mention rules mechanics is when they become a focal point for a combat or situation (such as a badly timed '1' on a save or an attack). YMMV.