I'm sorry for being ambiguous. I meant encoding, not decoding. In my opinion an average PC should be able to encode at least some minutes of video in reasonable time.
Whatever, having to recourse to frame dropping (even in a negligible degree) means having 100% CPU or IO load already reached, doesn't it? 100% load on 720p playback sounds bizarre. I have been accustomed to any video playback taking just a few percents on any old computer with Intel graphics.