Why would you want to run KDE to view h.264 videos? Just wait for the Chinook update and you are good to go. Chinook has straight support for videos encoded for the iPod format. And what I have heard, the quality is ok. I would imagine, that KDE takes fair amount of resources to run. So that leaves even less of the resources to be used for video encoding.

Personally I think that the KDE is a nice system for certain things, but for processor intense usage it is not. And if the installation is not plug and play, and the developement is not intense I definately wouldn't bother.