I wouldnt make the clips too long. Ofcourse long clips are nice for the surfer, you should tease them with it and dont forget, the longer the clips the higher the chance the surfer cums. And those usually dont buy.
About formats, you can go with mpg of wmv, tho it seems some LL owners prefer mpg, I never had a problem with wmv. I use wmv because it makes my movies a lot smaller.
And you should link the thumbs to downloadable clips, I dont think LL owners would like inbedded, because it requires scripts, which ofcourse can be abused.
Hope this helps a bit
