Do you have a decent video card? You might want to look in to ATI/nVidia's software for their cards. Extremetech did a review of them recently and they do fairly well.
Ditto. Converting video on your gpu is way faster than using your cpu. I use Badaboom for nvidia cards. I have also used Handbrake, and several open source linux based programs (nice and free) in the past.
http://www.videora.com/en-us/Converter/iPod/ <---- its awesome and free and high quality conversions