You forgot to mention the format of the video you're trying to play. I set up a dual 2 GHz G5 with Final Cut 6 to edit a feature with 2K footage (2048x1024) in ProRes without any problems at all. The same system had no problems playing 720p outputs from that feature at 1.5 Mbps in h.264.

If you're trying to play YouTube or other Flash-based 720p, your system will have a much harder time. If that's the case, try ClickToFlash because it'll allow the selection of the h.264 version, if available, from sites like YouTube.