Thanks bilditup1 for the info, it was very nice of you to try and help me! I did finally manage to succesfully change the container to MP4 using MP4tools. The issue wasn't so much the 'overhead compression' as it was the combination of audio files that were on the original 16g MKV of SWv2.0

Basically all I had to do is select the Video stream and the compatible 5.1 track, and hit convert! The final MKV remuxed to a size of 14g without any change in quality! The conversion process created a 2 channel AAC track as well to make the MP4 playable within iTunes! Happy camper here, and STILL blown away by this incredible gift Harmy has bestowed upon us!