I've never had an issue mixing WMV files with native formats, even back in CS4 before CUDA and the MPE. What are the overall specs of your computer? And do you experience a slow-down with a third or fourth layer of video that is not WMV? I know you said FLV doesn't have the slowdown, but I'd be interested to hear what happens if you layer three or four other formats together...
Specs of my PC are Intel 860i CPU, ATI Radeon 5850 GPU, 8 GB RAM, 4 x WD Black Hard Drives (1 for OS, 2 for the assets, 1 dedicated to scratch files and Windows Page file).
I basically apply 2, 3, or 4 filters to the 720p MP4 files... Invert horizontal, invert vertical (cameras are upside down), color correction, and in the case of the 2nd MP4 file, PIP. Without the WMV file into the mix everything previews smoothly. The WMV file I apply the PIP filter and a blue screen key filter. As I mentioned, if I convert the WMV into FLV and use it instead (even add a PIP and blue screen key filter), the preview is smooth and there is no need to render.
This is my first project in Premier Pro, previously I was using Elements 8 but the need to render constantly in order to preview the project/part of the project slowed me down considerably. I moved to Premier Pro mainly to save editing time. Note that I need to have the 3 video assets synced to each other all the time.
I'm sure one of the other guys who has a better handle on hardware could speak to this better, but an i7-860 CPU sounds a little weak to me for video processing. When I had my current system builty by the BOXX company a year ago, the i7-920 was the base chip they would put into it for video work.
A quick look at the codecs used in WMV compression makes me think its probably a pretty processor-intensive codec for use in editing. Just because something plays great in a player doesn't mean it will edit well, because editing software has to break down the "packages" of compression to access the individual frames. The FLV format is used for delivery of video on the web, and I personally would never edit in FLV unless I absolutely had to (I was given a FLV file and asked to cut if up, for example).
Try the free program, Handbrake to convert your WMVs to a more editing friendly format, like mpeg-2.
And in answer to your original question, about whether or not a CUDA enabled card and using the MPE will help you, the answer is that I'm not sure if it will help with WMV in particular, but it will help overall, especially if you're using the built-in effects that utilize the MPE, which in turn would free up more CPU power that could be applied to your WMV footage--so yes, it will ultimately help you.
WMV's require a lot of CPU horsepower to process. The CODEC's are effective for delivering streaming content, but are not ideal to edit.
I do not believe that MPE will help with WMV's.
IMHO, Adobe's built-in and stand alone Encoder that ships with the CS5 Production Premium (which I got) is a very good encoder/transcoder and there is no need for me to use Handbrake. The reason I use flv (actually it is the other flash format that preceeds flv in the Encoder choices, I just can't remember off hand) is because the WMV is transcoded into it's native resolution, say, 850 x 456, not one of the standard 720p, 1080p, etc. resolutions that you have to default to when using other formats... If I use those other formats (mpg2, etc.), my transcoded file will have black borders all around and I then have to apply another filter (crop) to remove those borders.
The reason I use flv (actually it is the other flash format that preceeds flv in the Encoder choices, I just can't remember off hand) is because the WMV is transcoded into it's native resolution, say, 850 x 456, not one of the standard 720p, 1080p, etc. resolutions that you have to default to when using other formats... If I use those other formats (mpg2, etc.), my transcoded file will have black borders all around and I then have to apply another filter (crop) to remove those borders.
Actually, while seleting one of the presets will default to a certain size, all you have to do is reset the width and height numbers to match your video... I'd do that and use a different codec, because FLV will not give you the best results, especially if you're applying effects to it!
There should be no need to spend money on additional hardware or transcode the footage into another lossy format.
Your first option is to simply ignore the less than real time preview. It often isn't needed for editing.
Your second option is to render if for some reason you do need real time preview.
Both options are free of charge and avoid quality degradation. (Assuming previews aren't used for export.)
Just a followup on this issue... I was able to resolve the preview choppiness on my project by encoding the WMV using a slightly different codec. I selected VC-1 Main instead of VC-1 Advanced. Applying key, drop shadow, and resize filters to the WMV file and adding it to 2 other video layers (also with multiple filters) no longer slows down the preview. No need to get an MPE capable video card for now