I looked into the build logs for i386 - it looks like there is an error in compiling ffmpg:
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CC libavcodec/x86/dsputil_mmx.o
libavcodec/x86/h264dsp_mmx.c: In function 'h264_h_loop_filter_luma_mmx2':
libavcodec/x86/dsputil_mmx.c:731: error: can't find a register in class 'GENERAL_REGS' while reloading 'asm'
libavcodec/x86/dsputil_mmx.c:731: error: can't find a register in class 'GENERAL_REGS' while reloading 'asm'
libavcodec/x86/dsputil_mmx.c:731: error: 'asm' operand has impossible constraints
libavcodec/x86/dsputil_mmx.c:731: error: 'asm' operand has impossible constraints
libavcodec/x86/dsputil_mmx.c:731: error: 'asm' operand has impossible constraints
libavcodec/x86/dsputil_mmx.c:731: error: 'asm' operand has impossible constraints
libavcodec/x86/h264dsp_mmx.c:634: error: 'asm' operand has impossible constraints
libavcodec/x86/dsputil_mmx.c:731: error: 'asm' operand has impossible constraints
libavcodec/x86/dsputil_mmx.c:731: error: 'asm' operand has impossible constraints
libavcodec/x86/dsputil_mmx.c:731: error: 'asm' operand has impossible constraints
libavcodec/x86/dsputil_mmx.c:731: error: 'asm' operand has impossible constraints
libavcodec/x86/dsputil_mmx.c:731: error: 'asm' operand has impossible constraints
libavcodec/x86/dsputil_mmx.c:731: error: 'asm' operand has impossible constraints
libavcodec/x86/h264dsp_mmx.c:634: error: 'asm' operand has impossible constraints
libavcodec/x86/dsputil_mmx.c:731: error: 'asm' operand has impossible constraints
libavcodec/x86/dsputil_mmx.c:731: error: 'asm' operand has impossible constraints
make[3]: *** [libavcodec/x86/dsputil_mmx.o] Error 1
make[3]: Leaving directory `/build/buildd/xbmc-10.08~svn31938/xbmc/cores/dvdplayer/Codecs/ffmpeg'
make[2]: *** [ffmpeg] Error 2
make[2]: Leaving directory `/build/buildd/xbmc-10.08~svn31938/xbmc/cores/dvdplayer/Codecs'
make[1]: *** [dvdpcodecs] Error 2
make[1]: Leaving directory `/build/buildd/xbmc-10.08~svn31938'
dh_auto_build: make returned exit code 2
make: *** [build] Error 1
dpkg-buildpackage: failure: debian/rules build gave error exit status 2
******************************************************************************
Build finished at 20100718-0832
FAILED [dpkg-buildpackage died]
Purging chroot-autobuild/build/buildd/xbmc-10.08~svn31938
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According to another forum post this was a known bug, and USE=-pic solves the problem.
That's if you know what that actually means