CatBus said:
Also this method would only work reliably on Blu-ray and AVCHD, it may not work on MKV, and it wouldn't necessarily work on software players at all, and it would also suck when scaled down to DVD because DVD subtitles don't have the necessary color palette (or alpha) to be convincing.
This is what I was concerned about. If I convert the movie to a file to watch on such as an AppleTV, then the subtitles may not look right if they're not burned-in.