The computer has to decode what is probably H.264 HD content and encode into MPEG2 SD content. You could probably speed this up by using Handbrake for that part of the job. Handbrake will make good use of all of your CPUs and cores.
Hopefully Toast is smart enough to use the MPEG2 results directly instead re-encoding it again just for the hell of it. Choosing the right output from Handbrake is probably critical.
This isn't really a Mac Pro question; you might get much better answers in the
Home Theater Forum.