Heterogeneity of networks and end systems poses challenges for multicast based collaborative applications. In traditional multicasting, the sender transmits video at the same rate to all receivers independent of their network connection, end system equipment, and users? preferences. This wastes resources and may also result in some receivers having their quality expectations unsatisfied. This problem can be addressed, near the network edge, by applying dynamic, in-network transcoding of video streams. In this paper, we design, implement, and assess a network processor (NP) based video transcoding system using the Intel IXP1200. Experiments suggest that our system can adapt the video rate of MPEG-1 streams to a desired level on a per packet basis for moderate traffic levels.