Yes.

Adding "-lavdopts lowres=1,512" as a command-line argument will decode videos with a width of 512px or higher at half horizontal and vertical resolution. Or you can add a similar line to mplayer's config file to make it the default.

Ideally, there'd be a adaptive setting, where low res. decoding is only used when the decoder lags behind. Maybe in the future.

One final caveat, low res decoding causes ugly artifacts in some scenes.