As far as I can tell, you'll get best performance on the Z for movies if you make sure the audio is encoded at 48000 Khz. I suspect that is the sampling rate that the Z hardware works at, and anything else requires extra cycles to translate. The version of Kino included in Cacko 1.23 has an option to transcode the audio for you.
In the experiments I did a while back it didn't matter what bitrate the audio was, as long as it was at 48000Khz. A 160kb/s Stereo movie had much better performance than a 32000kb/s mono one, with no change in the video data
The encodings I've done so far are 640x480, rotated 90 degrees, 24fps, 750 kb/s DivX 5.2.1, with a 128 kb/sec stereo audio track.