Long time lurker, first time poster...
Don't know if this is OT or what, but have used MPlayer encoding with some success. At least regarding mpg -> "lighter format" conversions.
http://web.njit.edu/all_topics/Prog_.../encoding.html
Concerning the hot-linking can't you just use a directive like:
<Directory %PATH%>
SetEnvIfNoCase Referer "[MYDOMAIN\.]" local_ref=1
<FilesMatch "\.(gif|jpg|png|wmv|whatever)">
Order Allow,Deny
Allow from env=local_ref
</FilesMatch>
</Directory>