Thanks, I already tried this when I had my non-ISO 93, using the AVCHD trick. Sadly it didn't work. After selecting the AVCHD folder onscreen, nothing happens. It must have something to do with the incompatibility of having a 1280 720p video within the Bluray structure (ISO or folder), like you mentioned before. So the only options for playing a compressed video are MKV or M2TS. I love MKV because it's smaller, has chapters.....but won't play hidef audio, at least not on my ISO firmware, and won't support PGS subtitles. I thought a workaround could be converting all hidef audio to flac within MKV, but alas my ISO firmware won't play flac within MKV. So it's like frustration at every turn, learning to settle with M2TS (2nd best).
I wouldn't give up just yet. It is quite possible that 1080p PGS subtitles with a 720p video is not a compatible configuration.
You can easily test this by creating a BDMV, AVCHD or ISO structure without subtitles. I would try all 3 configurations, since there may be subtle differences in capability.
Whilst I have been advocating ClownBD, I recently discovered that it doesn't seem to migrate chapters from an mkv to Bluray structure: TSmuxer using a GUI seems to work better in that regard, plus has subtitle modification features that seem interesting but which I haven't explored yet.
Try converting the mkv to Bluray with TSmuxer but remove the subtitles and see if it will play on the Oppo, then play about with the subtitle options if it does to get video and PGS resolutions to match.
I hear your frustration: the studios have made damn sure that anything apart from legitimate optical disc playback is exactly that.
I stick with original quality, so do not have your frustrations with most material. Perhaps you need to ask yourself if reducing storage space is really worth it if it comes with these additional frustrations, especially if you migrate to a display later which does highlight quality loss through compression.