Holy crap the CRF 18 seemed to make a big difference. For some reason though when I burned the file to disc, it wouldn't play properly. Maybe it was the option I chose that was the problem (x264 Q21 Insane Film then modify CRF to 18).
I went through the process to get the cropping done right for each scene. What I did was use Virtual Dub to cut out each scene and save as an AVI using direct stream copy and number the scenes in order in the filename.
Then I used Xvid4PSP to crop, resize, and add black bars to each scene so that it was the same as it would be in the final product and save the files individually again. I used lossless AVI FFV1 to save them. Then finally after all of the scenes were cropped and resized, I opened the first scene, then joined each scene in order, and encoded the group into the final mkv file.
Here are the settings I used for each of the scenes:
http://i53.tinypic.com/34q21vp.jpg
It is easy to tweak it for each scene (assuming each scene is in a separate AVI file). Just adjust the numbers and hit Apply and see how it looks.
I didn't check to see if the aspect ratio was correct. This can be adjusted easily by tweaking the 117 setting. I chose 117 based on Harmy's findings that the height of the movie should be 486 (486+117+117=720). The correctness of the aspect ratio may vary slightly from scene to scene depending on how it is cropped in that scene, but I would pick one number like 117 for the whole movie or else the size of the picture will adjust itself and that would be distracting.
Here is the final product that for some reason doesn't work on a blu-ray player, but it looks real nice on a PC.
http://www.sendspace.com/file/aebelg
Mike