Post from an nvidia employee:
Transcode is one of the core operations behind Rage. Basically surfaces are stored on disk in a format that is extremely compression friendly, but is not usable directly by the GPU. Transcode basically converts from the disk format to an in-memory format usable by the GPU.
GPU Transcode performs this costly operation on the GPU instead of the CPU, which massively increases the number of pages that can be transcoded at a time (while maintaining 60 or near 60 hz). This has the visual effect of reducing the time between an item coming on screen and that item having the full, correct texture data available.
Here's a quick faq:
* Why don't they just de-transcode once and keep a cache around?
The format stored on disk is about 1/10th the size of the GPU-required formats. Keeping all of the detranscoded data in memory (or in a cache) would basically overwhelm available system memory. Keep in mind that it's not just how much RAM you have in your system. Rage is only a 32-bit executable, so it has a maximum addressable space of ~3G. Add to that the fact that Windows gets a little bitchy when memory usage for a single process gets too high, and you have a recipe for poor performance.
* Why is this NVIDIA only?
The underlying code is written in C for CUDA. When the engineer working on this started, OpenCL wasn't an option. Later, preliminary tests into porting the code to OpenCL showed poor performance compared to the C for CUDA implementation.
* Who will get the most benefit from GPU Transcode?
People with a relatively weak CPU and a powerful nvidia GPU will receive the most benefit, though those with a strong CPU will also see some benefit. If you have a relatively weak GPU (anything older or slower than a gtx 460, I'd tenatively say) GPU transcode will wind up doing nothing (falling back to CPU transcode) or giving only minor improvements.
* How do I make it work?
First, upgrade your drivers to the latest (285 Beta drivers). Then, in Rage, locate the option "GPU Transcode" and set to on. The option will not be available if you do not have the latest drivers.