I remember using winamp on a Pentium 90 and it was up to the job single tasking. I couldn't say the same about the one time I tried to encode.
I can't recall what hardware I first used an MMX-optimized encoder. I remember it making a huge difference though.
Found this (cubic player on a 386DX at 40MHz) https://www.youtube.com/watch?v=6Jj97NXgHw4 and I'm wondering how much a 32bit ISA is better than a 16bit one for integer decoding.
Given how much faster a Pentium 200MMX was than any 386 CPU, I very much doubt a 386 (even a DX) would have had enough power to decode in real time a MP3.