You can encode from DivxHD too, but less quality and small file size. Anyway these are TV rips so no comparison about them.
You need atleast 2.0Ghz to play that 720 only for minimum requirements. I think your 1.7 may give motion problems, may be you are not noticing them. For 1080 you need powerful machine, can play on minimum requirements but in low resolutions. Then its not 1080 HD video you are playing.