Hmm, if you extract all the *.wavs at once then you are going to need a reasonable sized scratch partition! Chances are they are using an encoder/decoder chip anyway - then they don't need much of a processor in the thing. I would expect the chip to encode in real-time. Hugo might have a better idea :-)

MusicMatch and iTunes (Apples player/jukebox/encoder/disk burner) will also encode and play at the same time. Of course the encoding is finished first, but it's not uncommon.

(list 6284, Mk1 S/N 00299 4GB blue [for sale]. Mk2 S/N 080000094 6GB blue)