I'd look at multithreading support. Which version of CoreAVC, for instance, or using ffmpeg-mt for H.264 decoding in ffdshow rather than libavcodec. Those Atom processors do support multithreading, right?
The recent coding boosts x264 has gotten really let the decoding process be more efficient as well. This computer of mine is 8 years old and using r1373 to encode with fairly insane settings* resulted in being able to practically watch 480p24 at full speed with ffdshow and even closer to full speed out of mplayer**. And I'm far more certain the specs on netbooks are several times beefier than what this desktop has.
*x264 --preset placebo --crf 18.0 --thread-input --deblock 1:1 --b-pyramid normal --scenecut 100 --aq-mode 2 --me hex --no-dct-decimate --output "output.mp4" "input.avs"
**Although I did have to encode on a different computer so that it would take 2.5 hours to process a 4-minute AMV. The note here is that weight-p, MB-tree, and the fact MB-tree and b-pyramid can work together brought the bitrate down to absurd levels while maintaining the quality. Bitrate is really the single determining factor, and the lower the bitrate, the easier job it has of decoding; CABAC being enabled simply adjusts what the upper bitrate threshold is - CABAC on, the threshold is lower, but not impossible to skirt underneath.