I used FFMPEG which is a free download here:
Then, I basically copied the encoding/demux command line mcobit used... which runs it in 2 parts, first an encode then a demux. To do this I created 2 small BAT files:
ffmpeg -i %1.m2v -b 2000k -vcodec mpeg2video -deinterlace -s 640x480 %1.mpg
ffmpeg -i %1.mpg -vcodec copy -an %1.m2v
Then, I copied all of the relevant M2V files into a directory, along with ffmpeg.exe (in the bin directory of the ffmpeg download), and these three BAT files. I opened a DOS Prompt with Admin rights, CDed to this directory, and did the following:
I ran ENCODE <name>, and when that finished, I rand DEMUX <name>, where <name> is the m2v filename without the m2v extension. So, for example, with lair.m2v, I did the following at the C: prompt:
What is left is a new lair.m2v that has been encoded down to a 640x480 with a 2k bitrate.
NOTE: This will erase the original higher-resolution/higher-bitrate M2V files in that directory so make sure you are working with backups!
Finally, just copy them back over the other M2V files on your Pandora, and DELETE the .DAT files so that the emulator will rebuild them from the new M2V files .
Hope that helps!
I have been asked by a few people on how to re-encode the mpeg files step-by-step, so here goes on a PC running Windows: