Hmm, that doesn't make any sense.... I don't see how a machine rendering at 3fps could possibly watch a video on Hulu and it would run totally smooth. That's basically impossible, logically speaking. I'm not saying you're lying, of course, only that maybe we're misunderstanding each other. If only we could each actually see what is on each other's screen, eh?
But, I will say this: I think this is a Hulu issue, and here's why. If I go here:
http://www.formula1.com/play_video.html
and I play the highest quality vid, which streams at 2400Kbps, it runs totally smooth, and looks like I'm watching a DVD. So, this tells me that it isn't so much that I'm having a problem with Flash, but with Hulu's output.
Also, I didn't tweak the quicktime streaming setting, both because when I stream in quicktime, say trailers from the Apple website, they run totally smooth. And then also there's the formula 1 site. Again, this must have something to do with the way Hulu encodes their stream? I'm not technical enough to know how that works, but it certainly does seem as though not all Flash streams are created equal.