Hi Loki,
I will display my ignorance ....or kick off the discussion if you prefer!
I rip my DVDs to MKV as this rips to the highest quality. The MKV is the container and the video stream is MPEG2.
MPEG4 was a later codec that I believe was developed to allow compressed (lossy) video streams.
I believe that h.264 has now been captured within the MPEG4 standard as Part 10; it allows greater compression for the same level of quality .....although I would test it and see what you think.
http://www.velleman.eu/downloa...h264_vs_mpeg4_en.pdf
I have produced lower bit-rate versions of my MKV files for when I go on holiday. Producing the lower size files is not difficult, producing ones that look good I find is ....but, there are many examples on YouTube, for instance, and these usually have a h.264 video stream.
Hope this helps.
M