I have the exact same problem on my Media Center machine, my laptop doesn't have an issue. Video playback goes CPU bound with streaming flash video sites (youtube and australian broadcaster abc (
www.abc.net.au/iview)).
I can play back the video stream fine for a brief period (HD videos normally about 30sec - 1min, Standard def videos about 3-5minutes), then all of a sudden GPU support gets turned off and the flash video becomes CPU bound. Eg, I can be watching a video at a nice 25-30fps rate, then when the gpu gets turned off it drops down to 3-9fps.
I can play back Blu-Ray discs fine on my Media Center machine and recorded HDTV from media center, 1080p H264 video and 1080i Mpeg2 video, with cpu usage of only 30-40%.
My hardware specs on my media center machine
CPU: P4 3.0 Ghz
Motherboard: Intel i965 chipset
Ram: 2Gb
OS: Windows 7 Home Premium
Video Card: ATI HD 2600 PRO 512MB (AGP)
My laptop (which works fine)
CPU: P4 3.0 Ghz
Motherboard: Sis 648 Chipset
Ram: 1.5Gb
OS: Windows 7 Home Premium
Video Card: ATI 9600 Mobility 128 MB Ram
Any idea's