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As a bit of an "audiophile" myself, Ralph, I completely understand where you're coming from. I'm a big fan of opera, and have an extremely good quality hifi system at home on which I listen to my CDs.
However, I travel a lot, and like to take music with me. I rip CDs for my iPod as 384k MP3 files, and at that bitrate I can personally hear no difference from the uncompressed original on the iPod. I could on my hifi system, to be sure, but not on the iPod. Nothing wrong with compressed audio if you can't tell the difference due to the limitations of the reproduction system.
The device being discussed here plays MPEG-4 video using, by the sound of it, the DivX video "codec". That's a very, very common one, and will give good results if used at a sufficiently low level compression and high bit-rate. As always, the higher the level of compression, the more "blocky" and pixelated the result with be - it's a matter of selecting the right level of compression for the device on which you're viewing the results.
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