This script works great! The only problem I had, which seems to be common, is multiple core support in mencoder.
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sudo add-apt-repository ppa:motumedia/mplayer-daily && sudo apt-get update && sudo apt-get upgrade
From what I understand This will install the daily builds of mencoder from the Motu Media PPA. They are said to be more unstable, but the only problem I ever had is that update manger wants to update every day. I fixed that System>Administration>Software Sources>Updates>Check for updates "weekly"
I have a dual Xeon dualcore server. I went from barley being able to transcode 720p (after buffering) to watching Big Buck Bunny in 1080 (after buffering). Let me know how it works.
The only problem I still have is, even though mencoder uses all cores, it does not maximize its CPU usage, meaning It only uses about 70% of total CPU. If anyone could give me some pointers, I would appreciate it.