Well, in this scenario i don't think more than one conversion was required, and anyways any encoder expert knows how bad are the results of a re-encoding, unless the encoder is optimized for the specific scenario...
About WMV restrictions, i don't know you are talking about, i use WMV in all places, from DVD backup to internet streaming without problems, just turn off DRM in your player and you'll be fine.
I'm not here to argue whetever is better, i just stated that WMV doesn't require to download additional codecs (if needed WMP will autoupdate).
About licensing, i cared to ask to MS Windows Media guys, and i happily discovered that for non commercial use there are no fees as long as you will use it in a windows environment...
If some coders are interested (Bobbau?) i can forward you the licensing info...
About encoders, there is the WMV VCM codec that can be used (for video only) in any encoder, virtual Dub too...
The only real problem is the "if it comes from MS then is ****" syndrome, which prevents most people from seeing things just as they are...
And finally, about me being a MS worshipper, you can call me that if you want, but i'm one of the few people who use reasonable manners with MS, and i'm leading an user project aimed to make MS more sensitive to the users needs and in the long term embrace the open source movement...
It's an hard as hell proposition but it's much better than shouting around against MS and try to force every user project (especially open source ones) to go into linux, like many borg-ish zealots are doing everywhere.
You can agree with me or you cannot, i respect your opinions, just do the same please.