I'm completely against codec packs of any kind as I've seen them at the root cause of many and varied insidious PC issues. I'm for them even less in 7 as it plays most of what's out there by default. Many of the formats you get movies in from "out there" are just plain bad formats and really deserve to be converted to something a little more conventional if you're planning to keep them around. I convert all questionable material to h.264/aac To that end I've not found a better, faster, more flexible utility than Avidemux.org
It uses all four cores and often fixes various image and sync images as it converts. Conversion quality loss? Sure, some but I'd much rather be able to play something back in a standard format with a consistent experience and sacrifice a little quality -- after all, odds are there's another higher quality version of the movie you just got that could stand the q-loss if you really want to keep the movie.