Just got a SL-C1000, but I've used CE devices for a long time, and DVD Catalyst 3 has always made playable movies for those slow processors. So I played around with DVD Cat 3 and the mplayer/Zplayer and found that the combination makes for sharp, audio-synched full-length movies. My specs are:
Video quality: 500kbs
Sound quality: 128kbs
Conversion format: mpeg2-mp2
Frame Rate: 30
These specs are too rich for the Sharp player, so for that player, I had to dumb down the frame rate to 20 and the sound to 64. Nor could I get Kino2 to play the files with any specs. But Zplayer works great.
DVD Catalyst 3 is a one-man show and I see that Mitch is having a half-price sale. 9.95USD for the full program. He does email support and it's been very fast and helpful in my experience with the HP Jornada 720 and my Zune and various Nokias.
At any rate, I've joined the Z party too late, I think, but my long plane rides will be a little more convienent.