Okay, here's my (brief) investigation.
I encoded a short DVD movie segment. Athlon-XP 2500+, 850x510, 24 FPS. CPU usage is ~45%. I don't know what you're complaining about - this is a reasonable number to me.
As for the codec itself, here's a side-by-side comparison of a Rockman 2 clip.
XVID: 2 pass, bitrate target=300, bframes=2 (bitrate goes even higher without it), GMC
http://dehacked.2y.net/rm2-bubbleman-xvid.avi
3.7 MB (300 KBit target was basically ignored)
H264: 3 pass, bitrate target=300, no bframes, frameref=12, allow small motion blocks.
http://dehacked.2y.net/rm2-bubbleman-x264.avi
1.1 MB
Both AVIs come from identical input sources, and do not include sound.
Please don't use download accelerators to download these. The server only provides a maximum of 80 KB/sec and you can't go higher.