Is it normal to have difficulty playing back 720p video in a browser?

My laptop is reasonably fast... I have a 2.5GHz Core 2 Duo, and an nVidia GeForce 8600M GT graphics card (256MB memory, I think). But I still have difficulty playing back 720p video in a browser (tested FF, IE, Safari/Win). Happens regardless of whether it's a YouTube flash player or a QuickTime player. It is pretty jittery, and it's not because it's run out of buffer. Running task manager, it looks like the CPU usage hovers just below 40% but occasionally spikes to 50% (entire core)... but I don't think that the jitters are only when it hits 50%.

Here's an example of a video that gives me playback issues (really funny video btw): http://www.youtube.com/watch?v=R7yfISlGLNU&fmt=22

I'm on Win XP Pro. I don't have similar problems playing DVD's in my DVD drive, although I guess I haven't done it in a while.

So I'm just wondering... is this normal to have performance issues like this? I have assumed my laptop was fast enough to handle any sort of video but now I'm wondering...

Also, does browser playback benefit from the GPU at all, or is it just the CPU?

EDIT: In addition to jitters, I am also getting horizontal lines in videos when I play them sometimes. I don't really know what to make of that, any ideas?