Spent days trying to find a fix, finally resorted to this. Bought Dxtory, figured even if i don't stream much, i'd much rather spend a few £££ to finally see the back end of this issue that's been driving me mad since last week. You can give the Dxtory trial a go first, it cost me roughly £27.00 to buy, about $45.
No FPS drop with Dxtory, and as good as quality as i can hope for on 1mb upload (don't even think there's much if any difference between using Dxtory/Xsplit to capture). Streams look pretty good and i can't even tell im streaming.
Note: You cannot stream your desktop with Dxtory, only DirectX/OpenGL applications. However, you can use Xsplits 'scenes' and in-built screen region to easily switch to desktop streaming if need be.
i7 950 @ 3.60Ghz
ATi 6950 2048Mb
Frame Rate: 30fps