Couple of other notes..
For those wanting to convert to divx / xvid, TMPGEnc Xpress works well. It freezes on occasion when importing the ts file, which I think has to do with the codec - unregistering / reregistering the CoreAVC codec fixes it - it works with CoreAVC and the ArcSoft codec.
As much as I'd like to leave the h.264 files as is, I haven't had any luck working with the files (removing commercials, etc.) which I need to be able to do. TS Cutter and TS Packet Editor both crash unexpectedly, often when I'm just about done with my cuts, which is unacceptable.
The good news is, I really can't see much difference once its converted to a hi bitrate divx or xvid - a little bit in the dark areas, but thats to be expected, and its not all that noticeable. I'm sure having Fios as the source helps a lot, since they apparently don't recompress the original signal. All in all, divx or xvid do a really good job with a clean source, and allows me to do whatever I want with the files - cut, edit, remix, whatever.