Here's what I've said in the past
There are several types of MPEG and they are all different, for video the most popular are MPEG1 and MPEG2 and MPEG4 and of course MPEG3 for audio.
There's a big difference between manipulating and editing MPEG video. There's also a big difference between MPEG1 and MPEG2.
A little background on MPEG
MPEG2 was never intended to be edited, MPEG2 was intended to be rendered from RAW streams and that's it, it was never intended to be an open codec to be edited. MPEG4 for example can be a closed or an open codec but MPEG1 will always be an open codec. Divx 5.0.3 for example which is an open codec uses a different MPEG4 algorithm than Microsoft's MPEG4 v7 or v8 which is a closed codec. Divx 3.11 for example was hacked into an open codec which is from Microsoft's MPEG4 v3 which is a closed codecs. Different companies can now do different MPEG4 codecs as long as they use their own algorithms.
The Codec
The MPEG2 codec is not free and contains proprietary codec algorithms, different MPEG2 codec algorithms can be made by several different companies, no matter what editor you have (well >$5000 anyway) even the worlds best MPEG2 editors may not properly work at editing certain MPEG2 algorithms or streams, they may work for some and not for others. For instance if I use Vegas Video it will use the Main Concept MPEG2 codec that's included with it but if I use my ATI-AIW capture card, it uses the Go Motion MPEG2 codec. All editors will 'do their best' at editing proprietary MPEG2 streams. The more complicated the algorithm of the MPEG2 codec stream is the more difficulties MPEG2 editors will have at decoding the proprietary algorithms because of this, problems can vary from out of sync clips to program crashes or freezes, or whatever... The bigger the MPEG-2 file the bigger the problem.
This is not a problem with MPEG2 editors, it's the nature of the proprietary MPEG2 codecs. In the end, unless you put down $25,000 down on a professional system, there is no guarantee that anything will work.
There are some simple less expensive versions that are able to do a good job, one of them that I do like for editing MPEG2 is
M2-Edit Pro ok it's expensive but cheap in MPEG2 terms and it does the job. You can always use it's cheaper little brother
MyFlix XE not as powerful but also 'can' in most cases do a good job.
According to the latest 'legal' version of TMPGEnc it no longer includes the proprietary MPEG-2 codec even in the trial version.
"Because current version of TMPGEnc does not have own MPEG-2 decoder feature, it relies on other MPEG-2 decoders installed onto Windows system through Microsoft DirectShow to read MPEG-2 file. Although Microsoft DirectShow does not support playbacking MPEG-2 file as default, by installing software DVD player etc., it is possible to playback MPEG-2 file. Microsoft Although DirectShow has such structure that additional component of DirectShow extends capabilities to read/playback other formats, however this is totally depending on software installed in your system, and it may be sometime unstable because of compatibility or conflict between such additional components, thus, we are not officially support/warrant the feature to read movie file Microsoft DirectShow. The meaning of movie file is, AVI(Type1 DV format), .mpg(MPEG-1/2) .asf .wmv .mov in this case. Although there are so many MPEG-2 decoder which can be installed onto Microsoft DirectShow. Not all of them can be worked for TMPGEnc."
In other words TMPGEnc will do it's best at encoding MPEG2 streams but you must provide your own MPEG2 codec and gives no guarantee on the results.
MPEG-1 is the best open simple free codec, meaning that it uses a simple unified MPEG algorithm that can be easily edited and re-rendered and is free but the quality is lower than other MPEG codecs.
MPEG-2 is a proprietary MPEG codec meaning that it's not free and uses high quality MPEG algorithms developed by different companies and royalties must be paid to use it, for example through the purchase of a DVD Player software, and distributing it is not legal it's considered warez. The downside is that different MPEG-2 codecs are not all compatible with MPEG2 editors.
MPEG-4 is similar to MPEG-2 meaning that different companies can develop their own MPEG4 algorithms, except that MPEG4 was meant to be edited and re-rendered and that some companies like Microsoft may keep their MPEG4 codec (WMV, ASF) closed while others like DivX-5.0.3 (AVI) may keep it open. DivX-5.0.3 for example have two versions of their MPEG4 codec, one is free but the Pro is not.
I hope this helps.
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