I've found a configuration string that works in VLC...at least when I'm streaming one episode at a time.
That config string uses the Theora codec for video and the Ogg Vorbis codec for audio. It takes the source material and scales it by half, and then deinterlaces it. The stuff at the end just connects the transcoded stream to the IceCast2 server. The source material that I'm streaming is 4:3, so I don't know if this will work with 16:9 videos. Let it also be noted that when streaming, this setup only uses ~20-40KB/sec of bandwidth. So you can stream to one client from say, a cable or DSL connection. Great if you have internet and want to stream a video from home to wherever you're at.
The problem I was having with VLC was that if you don't have just
the right settings, VLC crashes. It took me about 15 crashes before I found the right combination of options.
I'll check out MPlayer rlyan76, and report back on my findings.