And so far, it looks like it's working. (Btw, if you don't care about the tech stuff, move along)
It turns out that when I cropped and re-encoded clips even if I was matching the avg and max bitrates there would be a jerky-ness with occasional macro blocks or breakups between clips from different sources.
The answer was so simple I missed it. I was using CCE with setting templates I had built from Doom9's recommendations. The problem is that uses GOPs that are different than the Matrix trilogy uses. I was using M=3 & M/N=5 (N=15). The DVDs were using M/N of 4 (N=12).
I wouldn't have even thought that could cause a problem but it did. I did a test scene with my clips re-encoded that way and I matched the avg/max bitrates as well. I also tossed in a little unsharp mask in to help hide that it's an enlarged and cropped.
100% direct stream 24fps goodness with nary a hitch. It's 10x better than what I had.
A couple more days of work ahead, but it looks like I'll be able to ferret out all of these and make this pure film.
I think I see a light.