sbiddle: ATI haven't been able to fix the problems since they were first reported by a number of people (incl myself) in December 2007 when they first started H.264 trials. I'm not sure it's a problem they'll ever solve, despite their GFX cards and chipsets being superior in a lot of ways.
Hmmm. I have no issues in the happy place prior to 11.6 on my system, so it would seem that 2007 is a bit of a stretch. They had good playback up until about mid 2011...
Sure, something seems broken in there now, but it hasn't always been so.