i am exactly the same as you fella but i a m not sure i am making my self very clear. i want the same where mkv is remuxed (not rencoded) to a file type that is able to import into itunes but is also playable on my ps3 i think he problem lies with the audio that is contained in the .mkv for example itunes does not support ac3 audio in an mp4 container. but the ps3 does . same with dts . i think both support h264 with aac audio under the mp4 container. where as neither support .mkv
Actually it does support AC3 but you can't use MP4 you need to use the extension M4V.
Does your PS3 play M4V?