H.264 encoding is not up to standards

[studur]

Hi, I tried to convert a MPEG2 (720*480) 29,97 fps, 7000 k/s bitrate to Zune H.264 baseline (640*480) and the result is disastrous. The starting MPEG2 file quality is not in cause. The quality fluctuates a lot. I get much better results with dvix encoding. Since the H.264 encoding was the major feature that convinced me to upgrade to VS11+ I am very disappointed.

Will there be something done to correct this major flaw ?