Sorry for the late reply on this, but..
Have you installed the sdk?
Try 'which ppu-gcc' at the terminal..if it can't find ppu-gcc, the sdk isn't installed. If you need to install it I can point you in the right direction on that.
I just spent a little while doing exactly what you were indicating - compiling mplayer with ppu-gcc (sdk 2.0 on ydl5.0..i may give 2.1 a go on fc6). I got an internal compiler error with ppu-gcc, but I tried ppu32-gcc and that worked. I haven't tried measuring performance compared to a regular gcc-compiled version, so I can't really say if it's faster, and by how much. I'll try and do that later if possible. I tried a couple of 720p videos..a 720p mpeg4 trailer of underworld evolution seemed to play back OK to my eye, although the command line output was complaining about performance, so I don't know if it would be up to everyone's standard. I tried playing back a 720p WMV from blim's site, but it was too slow. I'll investigate command line options later to try and improve performance..I'll also have a look at different filetypes and see how they perform. It would be interesting to do a survey of performance as things stand at the moment across different media types. If there's enough performance there for even SD media centre applications, it could be a reasonable foundation for providing a XBMC-style app. I'm pretty confident it would handle playback of content up to, if not including in some cases, 720p, which would be an OK beginning while we await something more optimised.