Yes, SIB + mplayer does everything that makes sense to try and watch on the N900 (Not 1080p content, or every 720p). Xvid with packed bitstream that appears jurkey on the built in player works smoothly.
You just need to get the hang of the keyboard shortcuts (q quit, p play, up skip 15 min, right skip 15 sec, etc.) because there are no OSD controls.
I tried all options. I found this one to work best for me.