VLC 1.1.1 and Catalyst 10.7 have been out for a few days now. I've got it installed and trying it out. The biggest change is the use of graphics card to play videos which should offload the demand off the processor. I've tried it out and this is the result. I used Big Buck Bunny 1080p h264. They both run smooth with or without the acceleration but with acceleration the demand on the CPU is much less.

Without Acceleration CPU utilization starts out at 45% and goes between 15 to 25 at times jumping to 35% throughtout the movie.

With Acceleration the CPU utilization goes from 6% to 12% throughout the movie.

You can find BBB at http://www.bigbuckbunny.org/ and VLC at http://www.videolan.org/vlc/ and Catalyst at http://www.amd.com.