Hardware assisted encoding to transcode everything in real-time?

It is pretty annoying how different video streams inconsistently support or not support certain features like fast-forwarding and proper playback. It would be awesome to not worry about playback profiles and just transcode everything in real-time and not require at least double the storage to store the transcodes. It will also allow rendered subtitles to be enabled and disabled without having to choose one for the other for the transcode. Are there hardware solutions to allow for on-the-fly transcoding and streaming? The GPU of video cards are pretty powerful these days... can that be leveraged? I'm currently using an i3-530 so a software-only approach would not work for me.

We use FFmpeg to transcode and it does not utilize GPU capabilities (at least not yet). Real-time full-frame transcoding (not remuxing) does push the limits of hardware, I agree.

If you are talking about doing transcoding "in-memory", without writing files to disk (not increasing storage), then that's possible, but there isn't a huge performance gain.