Hi Joe,
In case you haven’t found a solution, I had a lot of luck with Tmpgenc 4.0 Xpress when I tried to do exactly this. I actually installed the trial version on a netbook(!) before I left on a trip and could encode using that weak CPU while traveling. Not something I would do often, but it says something about the product that it didnt crush my netbook. The resulting files were perfect (though watermarked since it’s a trial).
Tmpgenc costs $100 and I will gladly pay that when I get back to this project. It’s eacy to use and eaily the most reliable video software I’ve tried (OK, maybe neck & neck with Vegas Movie Studio).