720p should not be a problem, nor should 1080i
however, 1080p might be too much for it, older single core cpu's don't have the power. you can try a different codec. I found one called x264 which is supposed to be a faster H264 decoder. it helps a bit.
also check your power management and make sure the performance is set to maximum on the cpu. that will help keep the cpu at max frequency.