It doesn't have any effect on the a/v quality. It's just a shortcut for increasing how much of your cpu's time is available for vdub to use (instead of having to track down the process in the task manager, right clicking it and changing the process priority)
You won't really see much (if any) improvement in encode time unless you're doing something that takes a lot of cpu power to run (like...say, Folding @ Home
.) If your cpu is bogged down with other stuff, and you change vdub's priority your encode will go faster at the expense of making everything else more sluggish.
Setting the priority too high will make it seem like your computer froze, but that probably won't happen with vdub's little drop down priority box (realtime, and to a lesser extent...high, are not recommended if you change the priority manually in task manager.)