I am aware of an application called Flow Player, which can play flv, mp4, and, I think, a few other formats. It's just a flash application that loads into a web page, and a snippet of Javascript will define where it is to get its video from -- you then just point it at the URL of your appropriately-transcoded video. I have tinkered with it a little, but I haven't had the infrastructure to run it until just this week, which has been spent building said infrastructure out, so as yet, I don't know how good it is.

On bandwidth issues, well, as you already know, you have to think in terms of peak load. Unlike text, you do have a need to deliver the content at a certain minimum speed (and preferably faster, so that it buffers) in order for this to work well. Presumably, the bitrate of the video is known. I suggest adding 50% to that, and then multiplying that by the peak number of users you want to serve at any single time, and use that to guide your disc/network requirements. Obviously, if the demand warrants, you may want to consider using a CDN.

you may also want to look at QuickTime Streaming Server (or Darwin Streaming Server... the F/OSS version). It's been a long time since I've played with it, but my memory is that it works pretty well and is very scalable.
dss.macosforge.org/

hope that's useful.