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I have ppc 2002 on my x5 and my videos play smoothly. I was using pocket tv to play mpegs at first but once I tried betaplayer I dont use pocket tv anymore. There was some noticeable skipping every now and then with pocket tv but no skipping for the same movie file with betaplayer. I think the only reason you saw an improvement with ppc 2003 was that it doubles the buss speed which speeds up reading but it puts a big hit on your battery life. I would bet a 2002 os pda will run longer on a single charge than a 2003 os pda but I could be wrong if you put the 2003 os in powersave mode.
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