I've been very happy with mpeg 4 (divx codec on windows) ! about the keyframe issue >> when rendering try 'every frame is a keyframe'
I get very good performance this way (mixing, scratching, texturing,...)
I do limit the movie dim to 320x240 and the gemwin dim to 800x600.
hey, it's not broadcast quality but it's funky realtime this way!
why don't you try something like photo-jpeg or another intra-frame codec in an avi file and report back. i bet the quality goes up and your performance doubles.
cgc
kurt