Mpeg2 vs h.264... I always figured H.264 would provide better quality at the same bitrate as mpeg2. Only issue is how they are going to play it. Especially if it's interlaced.
Why is Compressor busted? Have you reset background encoding?
Oh no! Don't use QT conversion! Exporting a self-contained QT file at current settings or uncompressed settings and encoding that file elsewhere (Squeeze, DVDSP, QTpro or any 3rd party apps) usually results in much better yield than QT conversion.