Pandora can handle practically any software if its open sorce and someone port it into ARM processor. There's an avi, mpeg,mp4... player for pandora already being ported.
Gp2x software its open source and ARM software, so Pandora will have all the gp2x software + his own one made by the comunity.
Pandora will for sure have tons of nice software
Both VLC and MPlayer use ffmpeg for decoding, and browsing through the recent changes, I see a bunch of ARM optimizations. So I assume this will work fine on the Pandora.