I was under the impression that there isn't currently exist a way to put chapters in a video such that they appear on the iPod (The same way movies purchased from iTunes has chapters).
Not sure if iTunes sold chaptering is different from normal chaptering (never purchased any movies), but "normal" chaptering has worked on the iPod since the v1.2 firmware upgrade. Pressing the "select" center button while watching a movie puts the iPod into the "FF/Chapter" mode of operation. In addition to "fast forwarding" or "rewinding" in the normal manner, if the movie is chaptered, the chapter markers are displayed on the playback progress bar. While in this mode the "jump to beginning/jump to end" keys (left and right wheel areas) now jump to next or previous chapter locations.
Does Metadata Hootenanny now create iPod-happy chapters?
Mine seem to work perfectly but the application itself is till a bit "flakey" as far as its interface. You can graphically scan frame thumnails at a user set interval to manually insert chapter markers, load and insert text file chapter markers, extract chapter markers from an iMovie chaptered reference movie and insert them into the converted target file, or extract chapter data from files in a VIDEO_TS folder/image and insert them. Never used it myself, but you supposedly can even import chapter data from the internet.
Have only made one test file of a full lenth feature as most of my current work deals with the conversion of old movie serials and TV shows for iPod/"iTV" compatibility. It is only an MPEG4/AAC in the original profile using settings to keep the quality poor enough to make the file "less than suitable" for others to copy for their own use. However, if I get the chance later on, will try to post a link so you can evaluate iPod chaptering or you can e-mail me and I can send you a reference file linked to the server.
