well my curiosity got the best of me so i encoded the movie "dust to glory" in both xvid and x264 at the same bitrates and pixel sizes with the total file size being 700MB for both formats. i chose this movie because it has many high speed parts with a lot of dust so there would be gradients and a good chance to see any artifacts or even minute differences in quality.
after i cut the black bars off the video in fairuse wizard 2.1LE, the actual video size was 656x352, audio was encoded in mp3 @ 128Kb/s and the fps was 23. all other options were set by fairuse wizard, so default.
to be perfectly honest, there was a difference in video quality in favor of the x264 at this setting but i would consider it minimal, to the point that i would personally not take the additional time to encode into the x264 format for use at this setting. higher rates may fair better. the video was viewed on a crt and also a lcd.
laptop test - as far as cpu usage goes, the x264 version used approximately 30-50% utilization on a p-m 725 series 1.6GHz Dothan core that according to cpu-z 1.31 clocked itself down to 600MHz while the xvid version used approx 4-15% cpu utilization, again with cpu-z reporting 600MHz for the p-m 1.6GHz Dothan core cpu.
desktop test - on a 2.8C -> 3.0GHz, i turned off ht so the os sees just 1 cpu. cpu-z 1.31 reports 2995MHz. the x264 encoded video cpu usage was 15-30% while the xvid format cpu usage was 5-12%.
ram was not an issue as it never approached needing to use the pagefile.
both machines viewed the video from a server that is conected to them via 100Mb/s switch, both machines have xp pro sp2 and were running vlc 0.8.4. this is as fair of a test as i can make.
this test in no way is comparing actual cpus, as the p-m clocked itselt accordingly to what was needed. what it does conclude is that x264 needs at least 2x more cpu utilization to view than xvid and in my opinion the quality difference does not justify the additional time it takes to encode into x264, which is a conservative 2x. also, this is coming from a retail dvd and not a HD format.