realtime encoding and streaming with FFmpeg x64 and FFserver

Need:
Transcode a 4mb/s stream and restream it at 1mb/s on a E2160 CPU comp

I do it with VLC transcoding features.
But I had to lower quality quite a bit to try and get to 80% CPU on average and also had to target 600/700kb/s to be sure not to get over 1mb/s so that there's no buffering/hickups on the receiving end.

The idea to try and get to ffmpeg x64 would be to check wether I could get more quality and get nearer to the 1mb/s limit.

I've scanned through google, thing is ffmpeg grows fast and nothing seems up to date.
The other problem is that ffserver does not seem to work very well. Maybe there's another solution for the streaming part?

If any of you played with that and has some help to offer...

The stream to transcode is H264 DVD resolution, around 4-4.5mb/s
The output stream should not go over 110 kB/s. So I need help to optmize settings for quality for that speed, remembering the CPU is not top notch. I discarded GPU transcoding, but maybe there's something to do with a 9400 nvidia GPU?

Thanks a lot.