I am using Adobe Encore CS4
Yes Encore transcodes the main video. The imported video is in avi format.
The compression setting for the same are
Project Setttings
Authoring Mode blu-ray
Seetings PAL,1920×1080, Mpeg-2,frame rate 25
Maximum Audio/video bitrate 15.0 Mbps
Audio Transcoding PCM
Player Adobe Player
Export Settings
video
1920x1080i,25,high quality
video quality 5,
Profile main
level high
bitrate encoding VBR,2 Pass
Min bitrate 1.5, target 25, max 30
gop m frame 3, nframe 12
Audio
PCM , Output channel Stereo, Sample 16bit
Frequency 48khz