clonmult, Oh you mean the SCPH 5903, not very wrong at all the version of the sony PSX that was designed to play VCDs had an upgrade. why do you think they made a new version of it rather than sell software to be able to do it... it had a lot of extra features in it as well to protect against the rampant piracy in Asia
the MDEC decoding of the str files is a bit like mpeg-1 but its in the hardware, this is what they've changed for the 5903.
MPEG-1 decoding requires a lot of math and a lot of data moving so high bus usage, its possible to do it in fixed point since the PSX doesn't support floating point you'd have too, and thats all done on the CPU not the GPU, you cant hand off an MPEG1 data stream to the GPU... it has to be processed by the very slow CPU and while the CPU is working it gets access to the bus, which kills the speed of the GPU, so even if you could transfer the raw data via the GPU to the screen the decoding for the CPU would kill the frame rate.
The STR format was optimized for the PSX's hardware so it could stream it off quickly with little help from the CPU, even with that it still stutters, though thats more to do with the cheap CD mechs
You need movtools to create a STR file, it converts an AVI to a STR then you burn that as an ISO. Unfortunately movtools is an official sony developer product, so it'd be warez and against the TFP rules, on top of that as a registered PSX/PS2 sony developer i'd get in trouble
Aas for playing native VCDS no matter what clonmult says you can't do it, the modified RS3000 in the PSX just isn't upto it, there would be a handful of players if it could, theres one official one, the 5903 and one unofficial one the Gamars, both of them are hardware solutions.