There's some speedup by doing certain operations in YUV prior to conversion to RGB instead of afterward, since there's less data involved. There are a lot of restrictions on this mode, but for the most part they don't impact MPC, which only uses one output stream anyway. The main restriction you'd care about is that it doesn't work with ffdshow's queuing.
For more information:
http://msdn2.microsoft.com/en-us/library/ms788177.aspx