The best way of turning the PPM files that Powder Toy creates into videos would be to use a tool called ffmpeg.
ffmpeg -r 48 -i "frame_%06d.ppm" "film.gif"
Where: film.gif is the output file frame_%06d.ppm is the input file (%06d tells ffmpeg to match all files with the name frame_000000.ppm to frame_999999.ppm) 48 is the frame rate, I recommend 48, but anywhere from 24 to 60 should be good.