Yes, Downloads II will upload anything with the extensions you designate in the Admin CP. So you can add PowerPoint extensions (I forget what they use) and they'll upload, and by extension you can restrict files types simply by not adding a given extension.
As far as dial-up users go, the only time they'd run into a problem is if they loaded a page with a video on it, and that's only if it's from a site that auto-loads large files. I've done 150+ definitions for various media sites, and I don't know of one yet that does that. Most video hosting sites accommodate for dial-up users, and you'd simply be embedding videos hosted on their servers. As a former dial-up user, I can testify to that.
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