Are you saying that when you watch movies on your Palm, the battery last as long as when you are reading an e-book? Because my Palm doesn't!!
If you use MMPlayer (only works in older versions), you will see something call "idle ticks". Basically, when the processor is being used, it runs at full speed. (unless you undeclock). But it will decode a chunk and then play it back, like using a buffer. The idle ticks in MMPlayer are when the processor is resting. I'm pretty sure the other music players work in the same way.
A 128Kbps Mp3 would take say less power to decode than a 128Kbps Ogg. When the processor is running, it runs at the same speed, but it needs to run for less time to decode each "chunk" with mp3 than ogg, or it needs to run less frequently with mp3 than ogg.
You thoughts on the System Idle Process are probably correct for desktop computers, but mobile chips have to save power. I'm pretty sure the way mobile chips are made mean that when they are idle, they are not drawing power.
iiicRuled