Transcoding is a pain in the ass because it requires another computer with a decent CPU to decode in realtime (which means you can't run it off a NAS or some other server-based disk backup, unless you want to shell out the bucks for a really overpowered backup solution).
If I'm going to go through all that trouble and cost, it makes more sense to buy a low-cost ION GPU HTPC ($300) that can just run the video (even HD) without transcoding.
