It seems with some tweaking I'm able to get vlc to stream with less of a delay (less then a second), and if I can figure something out with the screen capture I think I may be able to reduce it some more.

I also found out how to stream video to mplayer in maemo. It seems it may be possible to use mplayer as the video player, and have another program to handle the input, like combining mplayer with vnc.