Can a 386SX play an mp3 ? Or any CPU without a FPU for that matter ?
I think you're right and that was around the 486 DX2, DX4, Pentium transitional time period.
Given how much faster a Pentium 200MMX was than any 386 CPU, I very much doubt a 386 (even a DX) would have had enough power to decode in real time a MP3.
I can't recall what hardware I first used an MMX-optimized encoder. I remember it making a huge difference though.
Linked from [0] is a page claiming to use MAD for mp3 playback on a Newton [1].
Not sure how those compare to a 386SX, but it's probably a good place to start.