Quality is largely determined by bitrate. The more bits in every second of video results in better quality.
2 limits constrain bitrate; the capacity of the disc (25 GB) and the Blu-ray specs of 29.4 mbps. If your movie is long enough to constrain the bitrate much, switch to H264 (for Blu-ray) as the codec.
Bitrate is a setting in the Adobe Media Encoder.