Encoding "quality" is a function of the codec used, and encoding "speed" may be enhanced with a hardware encoder, but my experience is that there is not a consumer level hardware encoder with decent quality...in other words, you may encode some formats faster with some hardware, but the current crop of software encoders will encode better quality final video.
PC video is pretty demanding, especially with lower powered duron to encode with. However, I used a duron 650 with my original AIW Radeon starting out, and mananged to get excellent results, my current rig just does it faster...but not better as far as capturing/editing/encoding are concerned (the exception being highest bitrate real-time MPEG-2 captures would drop frames). Capturing divx on the fly is going to be a bit much with your rig, and there are no divx hardware encoders anyway.
There are different TV-out capabilities between the different AIW cards however. Older Radeon and rage AIW cards only support 800 X 600 via TV-out (makes no difference at all for NTSC(or PAL) video however, as it exceeds the 480i broadcast standard that is displayed on analog TV sets)
The 8500 and 9000 cards support a component output adaptor, and the AIW 9700 has native component output. DVI and VGA will also allow high resolution output, all these methods are dependant on a display capable of actually displaying the signal.
Determine what your priorities are first:
Want faster encodings....upgrade your rig. Want higher quality captures, maybe simply using s-video input from your DSS reciever into your AIW could help quite a bit there. Want better TV-out, does your TV have s-video input? The image quality is actually quite good on my 32" Sanyo via s-video.
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