i am using gomencoder. it has better quality when converting cartoons(anime). i havent tried encoding with higher settings(1024 bitrate, 2 pass) like you do. but i think the output format will not turn you down. i encoded some of my movies at 380 kbps and the output is still above acceptable. it supports subtitles to be hardsubbed to the output file. check it out at gomlab.com. the best of all its free.

i tried using tmgpenc encoding my bleach series(i used the same settings when encoding with gom), it is damn slow T_T (compared to gomencoder)  and still gives  me a crappy ouput.