I would use Adobe PPro CS3. Or the Flash encoder with Flash CS3. Same thing.
That video is 536×360, 15 fps, VP6F codec, mp3 Mono, 700 kbps (guessing here a bit, looks like 500 kbps video plus audio). File size 11 mb for 159 seconds suggest 700 kbps total
About 1.5 the frame size as Youtube, but twice the data rate.
George Socka
BeachDigital
http://www.beachdigital.com