Wii streaming support is basically useless folks.
Well okay that’s kinda harsh, but really it’s suitable for YouTube videos, , PodCasts, output to small TVs, etc. Stuff where very low quality video and audio full of stuttering doesn’t matter. Very specific situations.
I have found no combination of TVersity settings that will guarantee smooth playback of AVIs on the Wii. Even if you dumb down your video resolution to 400x300 and set the compression to highest you still get choppy audio and low video framerate. The fine folks working on TVersity figured out how to transcode to Flash Video on the fly, so they decided to announce that TVersity can stream to the Wii, but the Wii is just too weak to handle it and nothing is going to fix that.
This is not TVersity’s fault exactly–if you view the Flash stream through your browser it looks good and is perfectly smooth. View the exact same content through the Wii and it’s just terrible. I do, however, blame those fine, fine TVersity folks for wasting everyone’s time (and money in some cases) by not explaining that while they technically can support the Wii, the quality and stability makes this feature of very limited use. For streaming your anime collection to a 42" plasma, it’s fail.