Don Melton has put together some amazing video transcoding scripts that allow you to effortlessly convert MKV files into mp4's. While trying to convert a few episodes of Fawlty Towers I discovered that the video was interlaced and needed the decomb filter applied. You'll run that with
./transcode-video.sh --filter decomb /path/to/file.mkvwith the end result being a much better conversion of the original.