mux h.264 into .avi

my goal is to output a file that will allow my ps3 to show soft subs. i am following a tutorial elsewhere, but am stuck at the muxing section.

i have 2 requirements: the ps3 must be able to read the output file, and the output file should not be structured (dvd, bluray disks) so that it is to be burned--> i need a single file that contains video, audio, and subtitle streams.

i demux my .m2ts into ac3 audio and h.264. i need to mux the h.264 into an avi container, and i tried this using avc2avi, but it outputs an avi with a missing index. divfix and divfix++ both output errors when trying to read the avi, so they don't work for me. i later read that avc2avi messes up on avi file creation when the h.264 is larger than 2047 MB, and to prevent this with larger files, I will need to split the original into pieces and stitch them together after muxing, but I would like to avoid this if possible.

so i have three possible questions:
1) is there a way to make VLC player permanently write a file with a fixed index, instead of in memory?
2) is there another way to mux my h.264 (which is 28 GB) into an .avi container?
3) is there another way to make my ps3 read subtitle streams (soft subs)?

thank you