I need to understand better how to encode video files.
I have toyed a bit with programs but nothing good.

I need to be able to encode video streams in realtime (or some seconds buffer) with a good compression ratio and minimum quality drop.

The idea is that I need to stream the encoded result to another location with an upload cap of 115KB/s or rather 100-105 so that there's margin and no skips on the playback end.

Basically we have:
PC1 runs Win7 pro x64 with a nvidia 9400GS and C2D 2160 (rather low end)
PC1 receives the original stream in RTSP format.
PC1 encodes the stream in realtime
PC1 Streams the result with the upload speed cap
PC2 receives the encoded stream

As of now, I do it with latest VLC.
I apply a 0.7 factor to resolution
Then set a cap to 500kbps for video in mpeg4 AVC
Leave the audio to 192 kbps AAC. Why? because these are video clips and audio is more important than video

These settings allow for a 80% CPU load in average
The upload speed is in the 100-116 range with the average very close to 100
It works fairly well with no glitches for hours.

But maybe I could improve on video quality, should I be better at encoding. I know I'm asking for a lot.

Any help appreciated.
I know this is a long post, fairly demanding, fairly specific and technical, but who knows, I might be able to have pointers

thanks



Stats for the original stream
Code:
Format                         : BDAV
Format/Info                    : Blu-ray Video
File size                      : 2.25 GiB
Duration                       : 1h 29mn
Overall bit rate               : 3 574 Kbps

Video
ID                             : 68 (0x44)
Menu ID                        : 1 (0x1)
Format                         : MPEG Video
Format version                 : Version 2
Format profile                 : Main@Main
Format settings, BVOP          : Yes
Format settings, Matrix        : Custom
Format settings, GOP           : M=3, N=12
Codec ID                       : 2
Duration                       : 1h 29mn
Bit rate                       : 3 100 Kbps
Width                          : 720 pixels
Height                         : 576 pixels
Display aspect ratio           : 16:9
Frame rate                     : 25.000 fps
Standard                       : PAL
Color space                    : YUV
Chroma subsampling             : 4:2:0
Bit depth                      : 8 bits
Scan type                      : Interlaced
Scan order                     : Top Field First
Compression mode               : Lossy
Bits/(Pixel*Frame)             : 0.299
Stream size                    : 2.03 GiB (90%)

Audio
ID                             : 69 (0x45)
Menu ID                        : 1 (0x1)
Format                         : MPEG Audio
Format version                 : Version 1
Format profile                 : Layer 2
Codec ID                       : 3
Duration                       : 1h 29mn
Bit rate mode                  : Constant
Bit rate                       : 192 Kbps
Channel(s)                     : 2 channels
Sampling rate                  : 48.0 KHz
Compression mode               : Lossy
Delay relative to video        : -432ms
Stream size                    : 124 MiB (5%)