Is this a question? specs for the Zune say 320x240 and WMV playback, H.264 playback, MPEG-4 playback supported.
So I'm assuming you could just ecode any video to 320x240 wmv or mp4 with your converter of choice. This is especially good considering that there are lots of people encoding to 320x240 mp4 for the ipod and psp.