Actually a Core2Duo CPU is enough to transcode 1080p with default network/quality settings, but a P4 is the very low limit in order to play a 720p video. That's why, if after setting a fair value for your network, or if you are on a wired connection, stuttering still occurs, it may be caused by an old (or not shiny anymore ) CPU. Please also be advised that reducing the bitrate will stress even more your CPU. But you can set more or less, depends on the strength of your network.
A value of 14, or 15 (in Mbits) is an average value for Wifi/CPL.
You'll need to set a limit to the bandwidth used by the program, in the "Transcoding Settings->Encoder settings ->Maximum Bandwidth" textbox. But if you are using default settings, and willing to play HD videos (or very, very good looking SD videos) on a WiFi/CPL connection, the stuttering is normal. For almost SD/DVD videos, transcode should be fine. The answer depends on the video type, your network configuration, and cpu power.
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