All right... weird. I remuxed your Blu-Ray into another Blu-Ray (not an AVCHD) using TSMuxer and now I have it working. I have to say it looks surprisingly good for being GOUT-sourced, DJ. It holds up well enough on my TV screen. Of course, grain is more apparent and it doesn't look cutting edge HD, but it's certainly impressive. I enjoyed it.
However, I also notice pixelation in black/dark areas like space. I'm not sure how you can improve this. Ah well. It seems as though you should use as little compression as possible.

As I said before, I think a DVD-9 sized Blu-Ray would be too small since the basic DVD is already a DVD-9. You really should shoot for a BD-25.

Judging from the quality presented here, I might just skip the V3 and go straight to this one, which makes it easier since I have a Blu-Ray burner ready to go.