With several concurrent CPU intensive processes running, the system (while perhaps still usable) will become less responsive. Especially an A1200 with slow IDE/PCMCIA interfaces. While it may be acceptable to you, using the CPU to decode MP3 has an obvious impact on system performance, period. Try listening to a 320k net stream with a DSP card, then switch back to CPU decoding and tell me there's no difference... LOL.
"I can do it without problems" isn't the same as "it doesn't slow down at all"
But don't let me stop you guys from having fun with your magic A1200's.