I think I can help here.
If you are doing ANY compositing in Encore (e.g. adding buttons that have any non-subpicture layers in them), Encore must create a new MPEG file, and therefore re-transcode the the video.
So here are your options:
1. If you don’t want Encore to composite your video, do all of your work in AE or PPro (including any button pixels) and then export your MPEG-2 file. Use this as your background, but make sure your buttons contain ONLY subpicture layers (you can do this by turning off layer visibility in Encore’s Layers palette, BTW).
2. If you plan on adding buttons with pixels or other layer content in Encore, export an uncompressed AVI from AE or PPro, then add your buttons or other layers in Encore, and Encore will composite the elements into a transcoded MPEG file.
Hope this is helpful,
Joe