On the fly transcoding with a RasPi is often discussed. The processor itself is not able to provide real-time software encoding. It requires an encoder that's able to use the RasPis hardware de- and encoding abilities. AFAIK there is no easy way to enable hardware transcoding inside tvheadend for the RasPi for now.
There have been many reports by people claiming success. But as much as i tried i was never able to reproduce it myself (mostly because my linux knowledge is fairly limited).