re-encode this software to get better image quality and CPU useage.

On a 1.6Ghz Win XP machine -
e.g. at the start I thought it was a fire being blown by the wind (due to the varying fashing pixels), then as it got close I found out it was a sledge in the snow.
I did try different screen resolutions, but there appeared no real difference in quality.
The level of graphics is similar to what I would expect on a 50Mhz machine (as in the "old days").
In short, two faults, 1) low quality graphics, 2) excessive CPU usage.
The overall theme plan is nice and well thought out.
My thoughts are that you should change your programming language or if there is an option to "compile", use it.