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I signed up for the Plex Pass for $4.99 to have access to the preview release of the Plex Media Server 1.7.x which had support for hardware transcoding for inlet based Synology NAS units. Fortunately my research turned out to be true and it actually worked!

My DS216+ii running DSM 6.1 can install Plex 1.5.3, but opted to install 1.5.7 which is available for download on Plex site. Unfortunately it can’t even stream
1.5Mbps

480p without stuttering to a single client. After installing 1.7.4.4017 I can stream at 4Mbps 720p smoothly without any noticeable issues so far.

Next up is to upgrade to 8GB of RAM from the stock 1GB of RAM the DS216+II ships with.