Thanks g-force, I worked out a better method though:

I first altered the line which adds a black box around the film near the end of the script to:

PAL==false ? Spline16Resize(720,384).Crop(8,12,-4,-14,align=true).AddBorders(6,5,6,5)

This cuts out the maximum amount of the black border (to aid compression) while still keeping it mod16 (I've understood the importance of keeping things mod16 now) without over-cropping the image.

It's now encoding via MeGUI (46 hours in, another 45 to go!) to x264. When this is done I will use mkvmerge to add an aspcect ratio flag to the mkv container to make it 853x368 (I think this is the horizontal res you meant, satanika) and then it will display perfectly.

From my understanding, this method will keep compressability at a maxiumum by removing the black borders as much as possible, but negates an extra "resize" step, which would degrade the image quality slightly while hindering compressability slightly by increasing the film's image size.

It worked on the 20 second clips I tried it on, anyway :)

Also, I've obviously cut out the subtitle code from the script and will be adding an srt into the mkv container when it's done.