You have an
Intel 950 GMA adapter, not known to be a graphics powerhouse by any means. Try mplayer2 and see if the newer libass helps. You might also give "-ass-hinting 0" a try with your current setup. It could be that decoding and formatting the subtitle stream along with the video and audio streams pushes the CPU to its limits. That little Atom isn't a powerhouse, either.
Open a terminal window and run "top", then play the video in another window. See what happens to the CPU load when you change different settings or watch different parts of the video. Running mplayer from the command prompt ("mplayer /path/to/file.mkv") will report a lot of useful information as well. If you get the "your system is too slow to play this" error, try some of the suggestions it lists there.