Just to follow up. I'm currently back to mpeg4 400x240 with vbitrate set to 900, and it is perfectly watchable. I have enabled virtual memory, and DISABLED realtime theads in the playback settings, as it seems to reduce momentary freezing, and the video is more watchable, seems fine, although it is still rubbish on the big screen.

I have come across an article on the myth wiki about transcoding for the N810 which suggests 512x304 mpeg4 with a vbitrate of 600, so I'll give that a go.

Is anyone else using this in anger, or have people just installed it to test and then put it one side? the only thing with me is that currently my transcodes run at about twice real time if the box is overwise idle, which is irritating if I don't want to wait.