I can play MKV's using VLC on both my PC and iBook. I use Flip for Mac for WMV's and don't have any problems....

I do however have problems playing back high definition (1080) videos, regardless of the format, as this is just a little bit much for a G4 1GHz. That said, my 2GHz dual P4 also has problems so I think the graphics card may be more of an issue than the processor (the iBook has a 16MB card while the PC has a generic 128MB card....)