Hi,
I tried to stream / transcode an avi compressed with Divx to H264. The avi file plays fine and can be streamed / transcoded to WMV2 without a hitch.
The H264 trsnscoding, however, failed miserably. The CPU usage climbed to 99% (P4 2.4 Ghz, 512 MB RAM, Intel MB) and the machine almost crashed (XP Pro SP2, took about 3 minutes to pop up the task manager).
It happened the same in all the previous versions of vlc that I tried.