OK, a bit of an update –
I decided to try and ‘fake’ the transition by making another menu, ‘trans-menu’, and putting the transition movie clip as the menus background. I then deleted all the buttons, and set it to loop once then automatically move onto the next page.
Alas! It once again squeezed my movie clip the same as it had when I had a button-transition correctly in place.
However – If I added a button to the ‘trans-menu’ menu then it DOES NOT aqueeze the video, and it plays fine. So I created an invisible button and put it in and it worked.
It seems that somehow Encore knows when you are trying to play a piece of video – either through a button transition or through an empty motion menu – and squeezes the video. However as soon as you add a button or object it does not squeeze any more.
This has not simplified my problem, actually it has had the opposite effect, I am more confused than ever. I would love to use the button transition feature, and not have a whole stack of transition menus with invisible buttons!