I was using compressor 4.0.5 so maybe I need to run an update to get that new feature.
My compression settings were very basic, but it should not matter, right? because I used the same settings for both encodes and the one with the higher rate gave me a smaller file which goes against everything I understand about compression.
Also, does compressing down to 720 really give better quality? Seems like just more work for the compressor which means more compression and lower quality rather than leaving it at native 1080. I could be totally wrong about that.
I might try handbrake though, thanks for the suggestion.