Which part of transcoding is being a pain in the ass? I find fuppes ( http://fuppes.ulrich-voelkel.de/ ) to be working perfectly. If you're trying to transcode high def mkv/ts/etc, I agree.
If I'm going to go through all that trouble and cost, it makes more sense to buy a low-cost ION GPU HTPC ($300) that can just run the video (even HD) without transcoding.