The DC should be able to handle MPEG/VCD movies fine. The problem with bad frame rate stems from the media the movies are stored in, typically 74 or 80 minute blanks, coupled with the software decoder used. The DC was made to read off GD-ROMs where the pits are much smaller than that of 74 or 80 minute blanks, thus a lot can be read quicker given the same Constant Angular Velocity as that for 74 or 80 minute CDs.
I've seen FMVs on certain DC games that run at 3.2 Mbit/s and playback is smooth. DC FMVs are composed of essentially a high bit-rate MPEG-1 video component multiplexed to ADX audio, differing from regular MPEG/VCD movies in that a different format for audio is used (i.e., MPEG/VCD uses MPEG Layer II audio). Perhaps the audio component of MPEG/VCD movies requires more CPU power to process than regular DC FMVs. AFAIK, MPEG/VCD audio are much more compressed than ADX audio found in DC FMVs.
Curtis: I think Boddah was referring to the VCD boot disc, not the boot disc that made history.