[Chris Blair] "I just find it interesting that major video sites are using H264 without issue yet there seems to be this reluctance to implement it on smaller sites. "
Could have to do with the difference between the way H.264 operates in a streaming server environment vs progressive download or the capabilities of higher end video conversion programs to convert video into the correct format vs open source packages. Video technology on the web is relatively new and the tools to properly implement a full featured system that works with and deals with the problems that arise with the plethora of video codecs isn't fully developed in the open source market.
Money answers all things and if you don't have it, many problems arise trying to accommodate the problems at this point. And believe me there are a lot.
Abraham