i5 does not "spank" yorkfield in encoding. 95% of encoding is done during the second pass and Q9550 at 2.83 GHz (let alone 3.8+) STILL performs exceptionally well, particularly for its age. Comparing the Q9550 to i5 doesn't make any sense because he has an E8400 right now. Comparing it to that, you'll see that he can either spend ~$170 for 85% more performance, or $450+ for 105% more performance (still looking at the second pass in x264), and you can make that $170 stretch much farther than the $450 by getting that york in the mid 3 GHz. Sure an i5 at 4 GHz would be faster, but not $300 faster. If lsquare isn't super serious about encoding and it's only something he does occasionally, spending the extra money becomes even dumber.
Like I said, if he is serious about encoding he needs to go all the way to the i7 860. It is the i5 750 that is the waste of money. If he were coming from a i945 system and just wanted to play games, the i5 would be great, but if this guy, with his current system is going to make a move for the sake of encoding, the only cost-effective choices are Q9450 or i7 860. It's like someone said in the other thread, CPUs in general haven't really gotten a huge speed boost since conroe/penryn. The i7 only shines in a few special cases. I think spending as little as possible on a used yorkfield would be the best thing, it will keep him happy until sandy/ivy and we'll see how encoding responds to 256-bit vectors.
Yes 775 is a dead socket so why not max it out before you toss it aside? That's called getting your money's worth for the socket you bought. His E8400 can still be made to tear up any Phenom II so dismissing this machine on account of its socket is absolutely ridiculous. It's not like you have to make a huge investment in a brand new chip. Used yorkfields are sub-$200 and will do 3.4+.