I listen to MP3s on my A4000, plain 25 MHz C= 3640 CPU card.
Of course, it required some trickery to find the right setup.
I use MPEGA, the command-line player. Give it fifteen seconds of buffer, play in mono, with frequency division. It works fine, as long as you don't do anything nasty like browsing the web or opening a drawer with icons in it.
I think my 40 MHz Apollo 1240 copes much better, but I haven't had much time to play with my 1200. Plan to use it as a portable karaoke machine, though.