At my current work, Provis Media Group, we do a lot of video for the web. We've had a lot of success with larger format video than is usually delivered via the internet. When Flash Player™ 9.0.115 came out allowing fullscreen h.264 video delivery things really took off. Quality went way up and we were able to deliver 720p+ content over the internet. In full screen it looked great. However, when we shrunk a video smaller than its true size some artifacting would occur. Really, it wasn't that terrible but we pride ourselves on the quality of video we deliver, especially since most of it is done in house. When flash player 10 came out we noticed 2 new wmodes, direct and gpu. Both were suppose to affect drawing performance on the screen and we thought gpu mode should improve the quality of our videos. In order to be sure we had to test it and compare it to the default mode that we almost always use.
Test after test proved that there really wasn't any noticeable difference. In fact, wmode=gpu didn't provide any noticeable playback difference but it did affect the player. [ad#Adobe Banner] The more we read, the more it sounded like wmode=gpu really wouldn't do much for most people until Flash Player™ 10.1 ( currently in beta 2 version on Adobe labs ). Installing Flash Player 10.1 did improve performance on the CPU ( which is awesome ) but their still wasn't a difference from the default.
In the end the best thing to do with our video was to turn smoothing on. This actually made a dramatic improvement. In Flash Player 10.1 you get enough of a performance increase to make this work on even slower computers than before.
So wmode=gpu still may not be a magic bullet unless you control the playback platform but turning on smoothing gives you good performance if you are having artifacting when your videos get resized. You still need to be concerned about cpu performance ( for now ) but flash player 10.1 will really improve that.
If you have had different results or even the same, I'd love to hear your experiences. If you celebrate Christmas today then Merry Christmas and to everyone Seasons' Greetings and Happy Holidays.