Thanks for all the info Richard. The original test with the 1080p clips were the DJ HD quicktime files without any additional compression and I did realize that I would need to recompress them at some point.
I have done some further testing and by reducing the resolution to 720p along with the PhotoJPG CODEC at 50% I was getting good performance with 2 layers playing back in sync without dropping frames. If I reduce the resolution even further, say to 640 vertical pixels, then I can get four layers playing back in sync simultaneously without any droped frames. I performed this test showing two halves on a blended 3:1 RP screen (15' x 45') and the quality between the 720 version and the 640 version was barely noticeable.
I will try the CODEC that you mention above and see how that works for me. Speaking of different CODECs, what do you know about H.264? It looks like a very promising new HD CODEC and I would like to try this with Catalyst as well. Been hearing a great buzz about this.
Check this out:
http://www.apple.com/quicktime/technologies/h264/
Best regards,
Scott Riley