OK, it seems like the compression is gone with the new version of mkvmerge (according to mediainfo)... but I'm still getting errors at certain points on my PS3 with converted files. I'm at a loss to figure out what's going on if it's not the compression.
I figured out how to convert to MP4 with all the settings I want though.
I figured out how to convert to MP4 with all the settings I want though.