Bulk transcode MPEG-2 to H.264, keeping all subtitles

Rightly or wrongly I swapped all of my ripped VOBs in VIDEO_TS folders to MKV files with MakeMKV. Ran fast, kept all subtitles and various audio streams.

So now I have a bunch of MKV files with MPEG-2 video that are 2x the size I need them to be.

I would like to transcode to 264 but keep the same quality level/bitrate etc. Will I get any smaller file size if I do this?

So then my next question - should I transcode to MKV or to MP4?

I want to keep multi-language subtitles.

MP4 is nice because it can contain metadata and thumbnails in the file itself. But MKV is what I've basically standardized on.

Question: if I converted these to MP4/h.264 with subtititles keeping the same width/height/bitrate etc would they have to be transcoded again for an iPad 2 or would those MP4 files just copy over with iTunes?

Thanks (yes, I am a newb here).