Your Bay Trail Celeron should play fine even 4K H.264 files.
Try latest MPC-HC from here MPC-HC Nightly Builds or PotPlayer from here DVB Support Download Center » Daum PotPlayer » Daum PotPlayer 1.5.45955 using HW acceleration via DXVA in both players.
I formatted the drive and reinstalled the whole thing, and now it seems to work as expected - videos run smoothly and CPU is low.
There's still a quality issue regarding videos though: blacks show as washed out grey and there is noticeable color banding. It seems like an RGB<>YUV conversion issue, but I do not know how to solve it. Driver settings are at default, and I even tried switching between "full" and "limited" color range but to no avail.
Any help would be appreciated.
Intel's drivers have unfortunately a lot of settings turned on by default.
You have to turn them off by putting them to "Application settings" instead of "Drivers settings".
Also some other settings must be set to "off".
Look for these "hidden" settings carefully in the driver settings by pressing the little triangle down.
Thanks for your help.
I went through all possible settings in the graphics driver, but nothing had a dramatic effect. I did however recalibrate the screen via Windows and the display itself, and things are starting to look better.
However, I'm still experiencing a performance issue when watching flash based videos on the web through a browser. The CPU is high, and videos stutter and lag. Not sure if this is a plugin, browser or driver issue, as all are up to date.