Burried in the list of what is new in Silverlight 3 there is this gem:
Extensible media format support: With the new Raw AV pipeline, Silverlight can easily support a wide variety of third-party codecs. Audio and video can be decoded outside the runtime and rendered in Silverlight, extending format support beyond the native codecs.
What the above means is that with Silverlight 3 in addition to the built-in codecs for VC-1 and H.264 and the built-in containers (ASF and MOV) developers can plug an arbitrary audio or video codec and containers into the pipeline to support other formats like Dirac, vorbis, theora and the OGG container.
Both the codecs and the container parsers are authored using C# (or any other .NET supported language).
It would be nice to use Mono.SIMD where appropriate for these codecs. Mono.SIMD works out of the box on .NET, but it is hardware accelerated in Mono.
Atsushi at Novell has done some of the work to get an old C#-based Vorbis codec working with Silverlight 3. We will post more details when we have more information (the fix is on SVN).