I guess thats not a problem.
The client will receive invalid duration tags and metadata, but that’s a given.
Transcoding happens live thru pipes (on some machines at least) and that works just as well. So technically it’s not a problem. 🙂
Just on a sidenote: I’ve been trying the same thing with a ogg-vorbis stream. This is tricky because it is split up in hundreds of metastreams, which most clients have troubles decoding, and transcoding is itchy also.