I am doing video encoding in the cloud as part of a project for my startup. Check it out: https://github.com/sportarchive/CloudTranscode
This is a distributed transcoding stack using FFMpeg and Amazon AWS services. I use Simple Workflow (SWF) for parallel processing and Amazon SQS for messaging and event propagation.
The project is still in early stage but with little more work it could become pretty powerful.
Cheers,