I expect that most of the trick lies in the parameters. That's a very small video, even if he's running in a higher resolution. The YouTube clip is also not high-quality enough for us to get a good look at it and look for any tell-tale compression artifacts, so we don't know that he isn't using an older, low-speed-friendly codec like Cinepak. Same goes for the audio.
Video isn't really as intensive as people think it is, until you start cranking up the resolution and compression quality. Heck, Myst used larger videos than that and could run on a 16MHz 68020 or a 33MHz 386, according to the system requirements. This should be pretty easily within the 1200's capabilities.
