In this paper, we present a spatial resolution reduction transcoding architecture for H.264/AVC, which extends open-loop transcoding with a low-complexity compensation technique in the reduced-resolution domain. The proposed architecture removes visual artifacts from the transcoded sequence, while keeping complexity significantly lower than more traditional cascaded decoder-encoder architectures. The refinement step of the proposed architecture can be used to further improve rate-distortion performance, at the cost of additional complexity. In this way, a dynamic-complexity transcoder is rendered possible.