That's strange. A Core i7 should be able to crunch even a Blue Ray without maxing out.
I also have a favorite ffmpeg that I use that you can try here:
https://skydrive.live.com/redir?resid=A ... 0A32A0!203It's named Videoffmpeg, just drop it into your transcode subdirectory and out "Video" in the front of your transcode string to see if that helps. Some versions of ffmpeg do a better job than others of utilizing multipl core CPU's.
You can also try the latest build from the ffmpeg site, I think it's Zeranoe.com that has the latest Windows static builds. Again, download and unzip the latest build for your OS and just dimp the ffmpeg.exe into the transcode subdirectory to test.
Looking at your hardware, the only bottleneck I can see would be the upload speed from the server, but if your network isn't being heavily utilized, then you should be able to get 500kbps pretty easily as your phone has good download speeds.
Are you watching the CPU load on the server while doing the 4g playback to see the performance? How much ram do you have on the host? I've got a Core i7 desktop that barely whinces when I tested it for video on Subsonic when I first got into video transcoding which is why I find it odd that it could max out your hardware at 720p.
I'd suggest trying the latest static build first, then if there's no improvement, try my "Videoffmpeg" version. One difference may also be that I use the WAR version on Tomcat which does seem to perfom a bit better than the standard Windows version.
Keep me posted as I'm curious to see if we can pinpoint this for you.