So I went to Best Buy to get a Sony BDP-S5100 (of course with a print out of the Amazon page for it to get it at $89.99) and it does a much better job with Netflix than the Roku 2 XS. I've been testing it during the day and it was excellent, going up to 5800 kbps pretty fast, and never showing any of the super crappy encodes. It started at a low 720p and it went up to "Super HD" pretty fast. However, I didn't want to post until I got a chance to test it at night. So now having done that, I can still say that Netflix sucks, however it sucks a bit less with this Sony player.
Playing the cinematic masterpiece "Example Short 23.976" starting around 8:50 PM on the Roku, it is completely unbearable. It starts at 235k, and after a while it goes up to 1750, but never even goes up to 720p. I tolerated it for four minutes, and at that point it was showing 375k. This is connected with a cable, not wireless.
Right after that, at this point it was close to 9, I switched the LAN cable to the new Sony player, and played the title again. It started playing at 1050k, but quickly went up to 1750, then to 2350k (or similar), then to 3000k, and it stayed there for the length of the title. After that, I played it a second time, and it went fast to 5800k and it stayed there for several minutes until I stopped it.
Just to verify that this wasn't a case of Time Warner Cable having some kind of local buffer that would cause the Sony player to stream better, now I'm playing the title again on the Roku, with the Sony off. After several minutes, it's at 560k, and the highest it got, only for a few seconds, was 1050k.
So the conclusions I draw from this is that Netflix still has to upgrade their servers, however, if you use it a lot and you're frustrated to death over it like I am, it might be worth to get the BDP-S5100. It shows me much better picture than I ever got with the Roku, or even the older Sony player.
One thing that came to mind: a few years ago when I got the Sony BDP-S370 someone in this forum told me that Sony had their own streaming services, so their players were not getting the streams directly from Netflix, but that Sony's servers were used as a kind of cache for better service. If that's the case, it could definitely explain why the Roku has such terrible quality and the Sony BDP-S5100 has much better quality. Perhaps Netflix only has servers in the west coast, and Sony has servers all over the country.
Two drawbacks for this player, as far as Amazon goes, it's not that great, because it behaves like the older Sony player. It has to detect the speed, so it uses a test file, it plays it, and then it starts streaming. The Roku never does that. As for Hulu+, I've had the same problem I used to have with the older Sony player, most times a show will play in bad quality, and if I press stop and then play the same title, it will play at regular 720p in decent quality.
So if the services you use the most are Amazon Prime and Hulu+, the Roku is a better player, but if you use Netflix a lot, the $90+tax are money well spent. It's also a really good Blu-ray player, although the remote control is too small for my hands, and I hate that they changed the position of the pause button to above the play button, and the stop button to right below it, because I'm a creature of habit, so I pressed stop about 30 times already when I was trying to pause.