I run 2 x 9800GT in SLI on a dual core E6600 and the GPU Transcoding option was available in the 280.26 WHQL Official drivers and then later when I upgraded to the 285.38 beta drivers for BF3 / Rage.
I noticed no difference / improvement (or slowdown) by enabling / disabling this option.
Then, when the Steam PC patch was released on Saturday, this option dissappeared for me and was replaced with Anisotropic Filtering option and Texture Cache options.
The nVidia documentation suggested that only Geforce 500 series GPU's would benefit but I don't know if this was them just trying to get people to upgrade. I tend to agree with them that you need a newer, more modern GPU with several hundred CUDA Cores to take advantage of it which is probably why it disappeared for me. (although it didn't for Childs up above)
You can still force the GPU Transcode with the launch option
+vt_useCudaTranscode 1