Thanks shh. I've got the Incredible to recognize the video, unfortunately it doesn't seem to actually be playing it. The audio comes through fine, but the video doesn't show up. It's all blank.
So far I've tried a few different encoding methods. Handbrake for some reason isn't displaying video at all when using h264 and doesn't even display video in Windows Media Player. I've tried the x264 encoder by it's lonesome and that worked, albeit not in the best quality (nor did it seem adjustable, setting it to lossless did nothing?) but it was sans audio and I don't see any command line switches to change that.
I'm a bit lost as far as what to do now. It would be nice if there were a simple solution to convert your avi files to something Incredible compatible, but this sounds like it's going to be a headache. I've also tried Miro using the Nexus One preset, and it worked, but was missing frames, poor quality, and used low bitrate audio conversion to boot.