2bsterix: A short answer: Nokia 770 hardware is not fast enough to play any random video you can feed to it. So for best performance with highest visual quality it needs to be transcoded anyway. But now properly transcoded video plays much better in MPlayer than the same video transcoded for use with the default video player and frame rate does not need to be halved (I find 15 fps video not very enjoyable).

Check these links:
http://www.internettablettalk.com/fo...&postcount=158
http://www.internettablettalk.com/fo...&postcount=128

I think it is time to prepare some FAQ or we will get flooded with the same questions.

PS. There is still a lot of potential for performance optimizations, but don't expect any miracles.