This is what the DVD SP 4 manual says re: H.264 files:
"You can use the H.264 video format, also known as MPEG-4 part 10 and the Advanced Video Codec (AVC), in your HD projects. The H.264 encoder is twice as efficient as the standard MPEG-2 encoder. When compared to encoding with MPEG-2, this means that with the H.264 encoder:... You must use H.264 for HD DVD presets in Compressor to encode H.264 video assets for native use in DVD Studio Pro HD project."
However, i cannot get DVD SP 4 to recognize the .264 encoded files using these presets (Format h.264 for Blu-ray; 1080p @ 29.97fps; NTSC; AVCHD stream). Compressor produces a .264 video format file that DVD SP rejects. Do I have to use the h.264 for Apple Devices format (m4v) instead (which also is supposed to support Chapter Markers created in FCPX)?