Old laptop for a media server ? (F11, mediaTomb, transcoding, uPNP server, etc.)

[Linuxguy123]

We have a Dell 5100 laptop sitting here not doing anything.  My wife got
a new one a year ago. We need a media server to serve large digital
images to client computers running digikam and we also want to run
mediatomb to act as a server for our laptops and our uPNP capable tv. 

The 5100 has a Pentium 4 running at 2.66 MHz.  Right now it has 256 MB
of RAM, but I think I have 1 GB sitting around here for it.  Plug in a
new 7200 RPM 500 GB hard drive ?  Run a 1 TB USB drive for more
storage ?

I would like to run Fedora 11 on it.  (What else ?)  Boot init 3 ?  Run
init level 5 for doing administration ?

I am running the F11 Live CD on it right now.  It seems to work fairly
well, albeit a bit slow.

I love the form factor.  It would be quiet and small.  Its got a monitor
and a keyboard and built in battery back up, for a couple hours, anyway.
We have a wireless card for it too... I could do administration on the
couch instead of in some closet somewhere.

Will it do the job ?  I'm worried about the transcoding part of things.
Our TV doesn't support many video formats but mediaTomb does transcoding
so that we can watch just about anything we can store. 

Will it do the job ?

Thanks