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1) Everyone can play mpegs... id probably stay away from divx, people seem to have too many problems with that.
2) There are alot of simple free conversion tools out their you can use; avi to mpg, mpg to avi, avi to mov, and so on...
3) Zipping will not reduce the file size of movies. You can purchase TMPGEnc and create files with lower bitrates/framerates/smaller picture size to create smaller files.
4) I think most people will be happier with mpgs or whatever, with streams they will not be able to download the files onto their harddrive...
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