How To: Record 1080i HD Component from Any Source

[AVeNVy]

I spent over a year perfecting HD recording via component input on a Blackmagic Intensity Pro in SageTV. Of course, now that I've got everything working most of this will be obsolete in two months or so when Hauppauge releases their USB Component capture device! But, for those of you who can't wait or have already invested in a Blackmagic Intensity Pro in hopes of getting it working with SageTV, here's how to make it work:

Confirmed Working Hardware:
Set Top Box:

Motorola DCT-6200

Capture:

Blackmagic Intensity Pro
Blackmagic Decklink HD Extreme

Chipset:

Intel 975X
Intel P35

CPU:

Core 2 Duo (tested E6400) allows capture and playback of a single source OR capture of two simultaneous.
Core2 Quad Q6600 allows cap of three simultaneous streams and playback while capturing.

RAM

2GB DDR2 800 PC6400

Video Cards:

ATI X1950XTX
ATI HD3870
Note - an ATI card is only necessary to get the ATI AVIVO codecs installed. The AVIVO encoder DOES NOT DEPEND on the hardware on the video card. This means, if you want to, you can swap the ATI card after installing AVIVO and the ATI directshow codecs will still work fine. There used to be a hacked version of AVIVO that let you install without an ATI card but it's really outdated so I wouldn't recommend using the hacked version.

Storage:

Standard SATA hard drive. High quality HD recordings take about 8GB per hour. Be sure to keep in mind that all channels (including SD) take this much space as the STB is outputting everything at 1920x1080i.

Confirmed NON-WORKING Hardware:
Video Cards:

ATI HD2400 Pro (cannot get smooth playback - ok for dedicated server.)
Embedded ATIX1250 (cannot get smooth playback - ok for dedicated server.)

Necessary and Confirmed Working Software:
SGraphRecorder (http://www.nolberger.se/Sage/GraphRecorder/Default.htm)
Graphedit (http://www.videohelp.com/tools/GraphEdit)
OS:

Windows XP Pro (32-bit)
Windows Vista Home Premium (32-bit)

Encoders:

ATI Avivo Codecs - Note the AVIVO package is NOT INCLUDED with the ATI driver download - it is an additional download. You can find AVIVO for XP here:
http://game.amd.com/us-en/drivers_ca...adeonxavivo-xp
and for Vista here (toward the bottom of the page):
http://game.amd.com/us-en/drivers_ca...common-vista32

Decoders:

Cyberlink PowerDVD
Note - must use Overlay rendered if encoding and playing back on the same machine.

Confirmed NON-Working Software:
Decoders:

SageTV MPEG Decoder, DXVA Acceleration Enabled:
Video quality issue - strange shifting of colors and occasional corruption
FFDShow:
In spite of significant effort, never able to prevent occassional crashing on channel change
ATI MPEG Decoder:
Works ok but less sharp than Cyberlink decoder. For example, when watching basketball, the wood floor would look smeared occassionally.

Pre-requisites:
1. Ensure all your drivers are up to date.
Configure the Blackmagic Intensity for component input via the Intensity Control Panel applet.
[Insert Intensity Control Panel screen]

2. Ensure you've downloaded and installed the ATI AVIVO package

3. I'd highly recommend downloading and installing the most recent release of Cyberlink PowerDVD. I've tested a number of different video decoders and have had the best luck for this particular project with the Cyberlink decoders. I'm not saying others won't work but I'd strongly suggest starting with Cyberlink as I know they do. Some of the decoders I know are a problem include ffdshow (was never able to resove occassional crashing on channel change) and, surprisingly, the ATI ATI MPEG-2 decoder included with the AVIVO pacakge, which has some quality issues.

4. If you are using the Cyberlink decoder, set the "TRDenoise=0" registry hack to vasty improve image quality with the Cyberlink decoder and ATI video card. For more details, see here:
http://www.avsforum.com/avs-vb/showt...49#post8525849
here:
http://www.avsforum.com/avs-vb/showp...postcount=2011
here:
http://www.avsforum.com/avs-vb/showp...postcount=2121
and here:
http://www.avsforum.com/avs-vb/showp...postcount=2011

Most of those posts refer to HD2x00 versions of ATI cards, but at least the TRDenoise reg hack is relevant for x1x00 series cards as well. Also, there is some mis-information/confusion regarding whether the registry entries should be created as DWORD or STRING values on XP vs. Vista. I can say will 100% certainty that the TRDenoise entry must be DWORD on XP and STRING on Vista.

5. Download and extract sgraphrecorder to a working folder. I extract to c:\working\sgraphrecorder and will use this path throughout the guide

6. Register the dump filter included with sgraphrecorder by executing c:\working\sgraphrecorder\RegDumpFilter.bat

7. Download and extract graphedit to a working folder. I extract to c:\working\tools\graphedit and will use this path throughout the guide

8. Open a command prompt and execute the following (it doesn't matter what directory you execute the command from):
regsvr32 c:\working\tools\graphedit\proppage.dll
You should get a pop-up window saying "DllRegisterServer in c:\working\tools\graphedit\proppage.dll succeeded."
Registering propage.dll is necessary to open additional property pages in graphedit.

9. Ensure set top box is configured for 1080i ouput

10. And, of course, ensure you've properly connected your set top box component and audio output to the inputs on the Intensity Pro.

Now that we've got the prereqs out of the was let's make something happen...

Using graphedit and confirming connections
The first thing we'll do is use graphedit to simply watch our set top box on the PC. This will give you a nice little intro to graphedit if you've never used it before and also ensure the set top box is properly configured for 1080i ouput, properly connected to your Blackagic Intensity, and the Intensity is properly configured for 1080i input. The first thing you need to do is launch graphedit by running "c:\working\tools\graphedit\graphedit.exe". Once you've got graphedit open, insert he following filters by clicking "Graph --> Insert Filters..." from the pulldown menu and double-clicking on each filter listed below to insert it in to the graph:

Audio Capture Sources --> Decklink Audio Capture
Video Capture Sources --> Decklink Video Capture

Once you've got both filters inserted, close the "Which filters do you want to insert?" window.
Next we need to configure the Decklink Video Capture for 1080i input. To do this, right-click on the "Decklink Video Capture" filter in your graph and choose "Filter Properties". Select "HD 1080 29.97PsF 8-bit 4:2:2" from the Video Format pull-down menu. Click "OK" to close the filter configuration.



Next, confirm the audio filter is configured for two-channel stereo input (don't worry, we'll get to AC3 input later...).


Now that our input is configured let's add the audio and video render filters to the graph:

Audio Renderers --> Default Directsound Device
Directsow Filters --> Video Render (you will see two listed - just add the first one)

We can easily have the rest of the graph built for us by right-clicking on the "capture" pin (the little box) of the Decklink Audio and Video capture filters and selecting "Render pin". Graphedit will automatically insert the rest of the filters (if any are necessary) and connect everything to render the audio and video. Your graph should look like this:

Press the play button and, if all went well, you should be seeing and hearing your set top box on your PC. If you don't see anything, I'd suggest double-checking your set top box is set to 1080i output and that you have configured the Intensity to accept component input via the Control Panel applet. If you do see video, depending on how your PC is setup, you will most likely see some pretty severe combing when there's motion. That's because we're working with an interlaced input and not de-interlacing it anywhere. Ignore this for now - the video will be de-interlaced once everything is setup.

Encoding to MPEG-2
Now that we know our input is configured properly we can start encoding to an MPEG-2 file. To do this, stop the graph (push the stop button) and delete all filters except the Decklink Audio and Video capture filters. Now, insert the following filters in the graph:

Directshow Filters --> ATI MPEG Audio Encoder (if you don't see the ATI filters you don't have AVIVO installed. See pre-requisites)
Directshow Filters --> ATI MPEG Video Encoder
Directshow Filters --> ATI MPEG Multiplexer
Directshow Filters --> SBDARecorderDump (If you don't see this filter you haven't registered the dump filter included with sgraphrecorder. See pre-requisites)
You will be prompted for a filename When you insert the SBDARecorderDump filter. This is the MPEG-2 file we will be writing to. Make sure you give the file a .mpg extension. I suggest "c:\working\test.mpg". You do not need to put this file in the sage recordings directory. This file will only be written to when we are using graphedit.

After you've got all the filters inserted you should save your graph. Graphedit does crash on occasion and it can be really frustrating to have to re-insert all your filters. I'd recommend saving to "c:\working\graphs\cap1.grf".

This time we need to manually connect our pins. You do this by left-mouse dragging the output pins to the input pins. Connect the pins so the graph looks like this (the "AVI Decompressor" fileter will be automatically inserted when you connect the Decklink Video Capture to the ATI MPEG Video Encoder):



Now, configure the filters like so:







Once you've got all your filters configured, save your graph and then press play. If all went well you should see your CPU working and, if you open the directory where you are writing the MPEG-2 file in Windows Explorer, you should see the file size growing. Once you've got a bit of content, stop the graph.

Now, let's play the file to make sure somthing actually got written. You could just double-click the test.mpg file and have it play in the default player but I'd suggest playing it back in graphedit as this lets you see exactly what filters are being used for playback. To do this, open a new graphedit instance and select "File --> Render media file..." from the pulldown menu. If you have prolems with playback you might try inserting a different video decoder.

Configuring SGraphRecorder
Assuming all went well, now we're ready to configure SageTV to use the Intensity as a tuner. You can now close both graphedit windows (make sure you save the capture graph!). First thing we need to do is configure sgraphrecorder to use the capture graph we just created and configure a few other options. Open "c:\working\sgraphrecorder\SGraphRecorder.ini" and configure the following:

Port=6969

FileName="c:\working\graphs\cap1.grf"
TuningDelay=500
UnloadGraphOnStop=1
UnloadGraphOnSwitch=0

Save and close the .ini file then launch sgraphrecorder. Note if you are on Windows Vista and have UAC enabled you must run sgraphrecorder as Administrator. If you have Windows Firewall enabled you should see some firewall warnings pop up - make sure you allow them.

Configuring SageTV
Next thing you need to do is tell SageTV about the sgraphrecorder tuner. To do this, first make sure SageTV is fully closed (if you run as a service make sure to stop the service). Open your sage.properties, search for the following line - mmc/last_encoder_name= - and insert the following before that line:

mmc/encoders/410624/5/0/available_channels=
mmc/encoders/410624/5/0/brightness=-1
mmc/encoders/410624/5/0/contrast=-1
mmc/encoders/410624/5/0/device_name=
mmc/encoders/410624/5/0/hue=-1
mmc/encoders/410624/5/0/last_channel=
mmc/encoders/410624/5/0/provider_id=0
mmc/encoders/410624/5/0/saturation=-1
mmc/encoders/410624/5/0/sharpness=-1
mmc/encoders/410624/5/0/tuning_mode=Cable
mmc/encoders/410624/5/0/tuning_plugin=
mmc/encoders/410624/5/0/tuning_plugin_port=0
mmc/encoders/410624/5/0/video_crossbar_index=0
mmc/encoders/410624/5/0/video_crossbar_type=5
mmc/encoders/410624/audio_capture_device_name=
mmc/encoders/410624/audio_capture_device_num=0
mmc/encoders/410624/capture_config=2058
mmc/encoders/410624/default_device_quality=
mmc/encoders/410624/encoder_merit=0
mmc/encoders/410624/encoding_host=127.0.0.1\:6969
mmc/encoders/410624/encoding_host_login_md5=
mmc/encoders/410624/last_cross_index=0
mmc/encoders/410624/last_cross_type=1
mmc/encoders/410624/live_audio_input=
mmc/encoders/410624/never_stop_encoding=false
mmc/encoders/410624/video_capture_device_name=SGraphRecorder
mmc/encoders/410624/video_capture_device_num=0
mmc/encoders/410624/video_compressor=
mmc/encoders/410624/video_encoding_params=Best

Save and close your sage.properties file and launch SageTV.
Once SageTV has started, go to Setup --> Setup Video Sources --> Add new source, choose SGraphRecorder from the list and "YRYBY" from the input. Don't worry that the video does not play in the preview window when you select the input. Continue to configure the source as appropriate.

Once you've got the source configured, go to Detailed Setup --> Audio/Video and ensure the Video Renderer is Overlay and the MPEG2 Video Decoder Filter is Cyberlink.

Once you've confirmed, go ahead and give live TV a shot. Video playback should be silky smooth HD quality. If all went well - congratulations! You're now able to record DRM free content from any HD source!

The next thing to do is configure channel changing which I will not cover in this guide. If you are planning to use firewire channel changing, I'd highly recommend having a look at the how to record via firewire thread here for guidance:
http://forums.sagetv.com/forums/showthread.php?t=9288
The setup is basically the same except you will use the graph defined above for recording.

Video Quality Comparisons

Here are a few clips to help understand the image quality after the D-A-D conversion and recompression. The source clips are 1:1 originals captured from the firewire port of my Motorla set top box with a Comcast feed. I will continue to post additional clips of different types of content and configurations as I get the chance but please feel free to post if you've got a specific request.

1080i Content
Superspeedway Source
Superspeedway, 1080i Capture, ATI MPEG-2 encoder (maximum quality, 20Mbps), Stereo Audio

Enjoy!

--Nino

P.S. Please post any working configurations and I'll try to keep the guide up to date with this info.

ToDo:

- Adding AC3 audio
- Adding additional tuners

Thanks To:
Anders Nolberger for building the awesome and extremely flexible SageGraphRecorder
Everyone who contributed to the firewire recording guide - this was my starting point to getting this all working.
ImageShack for Free Image Hosting

Revision History:

02/10/2008 - v1.0:
Initial version

02/10/2008 - v1.01:
Added "Thanks To" and minor grammatical fixes
Added "Set top box" to known working hardware category

02/10/08 - v1.02:
Added inline images

02/14/2008:
Added Video Quality Comparison section

[Olias]

Very nice.

I've been working on this myself, but in my case I'm capturing 720p. I had some issues with Vista so I'm now testing with XP Home. Spent a few hours over the weekend trying to remember how the heck I got the ATI filters in my Vista setup. Finally realized that they were a separate download. When I've got it tweaked just right I'll add my config here.

[AVeNVy]

Thanks, Olias. I was never able to get 720P working with the ATI encoder as I think it's expecting interlaced input. If you are using the ATI encoder, have a look at the MPEG-2 output with Mediainfo and I think you'll see there's definitely something strange going on when encoding 720P input. I also decided to go for 1080i as more channels are broadcast in this format so the STB is doing less with the video. If you watch a lot of ESPN though 720P is probably the better way to go. Would love to hear if you get it working! BTW, What's your source?

[Olias]

I may end up going to 1080i but want to attempt 720p first. I've got a pair of DTV H10-200 receivers (only one connected so far). Had to work with SageTV support (great guys) to get a modified version of their serial dll to work with this older tuner. Also have the A180 for ATSC signals.

[Olias]

Well, I've got the 720p capture working. My setup required a couple of changes from AVeNVy's recommendations.

1. The file I registered in step 8 of the prerequisites was named "proppage.dll" not "propage.dll".

2. My Declink video capture settings were set to HD720 59.94p 8-bit 4:2:2.

3. I got a video playback error in Sage when trying to use the Cyberlink mpeg decoder. I had to use Sage's.

Now I just have to get the thing to change channels.
I have been using Sage's DirecTVSerialControll.dll to channel change on my sat tuner. But it appears that I can't use it with this tuner, I have to use either girder or some other external executable.

[heffneil]

This all looks interesting but my biggest question and sorry if it has been answered but have you run in to any problems with the copyright protection with HDMI?

Thanks,

Neil

[AVeNVy]

Originally Posted by Olias

Well, I've got the 720p capture working. My setup required a couple of changes from AVeNVy's recommendations.

1. The file I registered in step 8 of the prerequisites was named "proppage.dll" not "propage.dll".

2. My Declink video capture settings were set to HD720 59.94p 8-bit 4:2:2.

3. I got a video playback error in Sage when trying to use the Cyberlink mpeg decoder. I had to use Sage's.

Now I just have to get the thing to change channels.
I have been using Sage's DirecTVSerialControll.dll to channel change on my sat tuner. But it appears that I can't use it with this tuner, I have to use either girder or some other external executable.

Thanks for the catch - I fixed proppage.dll in the guide. Great news on getting 720p to work! Could please you post your hardware when you get a chance I'll update the guide? Also, if you wanted to take the time, it would be interesting to know if 1080i works with your setup as well. I'll definitely be giving 720p another shot with your suggestions on my boxes as soon as I get the chance.

Originally Posted by heffneil

This all looks interesting but my biggest question and sorry if it has been answered but have you run in to any problems with the copyright protection with HDMI?

Thanks,

Neil

Hi Neil,

We are capturing HD via component, not HDMI, so no copy protection issues.

Best,

--Nino

[fyodor]

Congrats on getting this working. Can you give us your subjective impression of how the video quality compares to that of your ATSC capture device? I'm thinking of getting the Hauppauge card when it comes out and I'm curious how badly the video quality is degraded from the extra decompression/compression and d/a conversion. Or alternately how it compares with just using the DTV receiver (since DTV HD quality is of lower quality than HD broadcasts).

Originally Posted by Olias

Well, I've got the 720p capture working. My setup required a couple of changes from AVeNVy's recommendations.

1. The file I registered in step 8 of the prerequisites was named "proppage.dll" not "propage.dll".

2. My Declink video capture settings were set to HD720 59.94p 8-bit 4:2:2.

3. I got a video playback error in Sage when trying to use the Cyberlink mpeg decoder. I had to use Sage's.

Now I just have to get the thing to change channels.
I have been using Sage's DirecTVSerialControll.dll to channel change on my sat tuner. But it appears that I can't use it with this tuner, I have to use either girder or some other external executable.

[heffneil]

Doesn't the card you are using have multiple HDMI ports? Has anyone tried using the HDMI cards with their local friendly cable box? I am really curious since I want to connect my STBs to sage with this card.

Thanks!

Neil

[gplasky]

They are using component-not HDMI. It's not going to work with HDMI because of HDCP.

Gerry

[Olias]

I will be out of town for a few days. I'll post more details when I get back.

[AVeNVy]

Originally Posted by fyodor

Congrats on getting this working. Can you give us your subjective impression of how the video quality compares to that of your ATSC capture device? I'm thinking of getting the Hauppauge card when it comes out and I'm curious how badly the video quality is degraded from the extra decompression/compression and d/a conversion. Or alternately how it compares with just using the DTV receiver (since DTV HD quality is of lower quality than HD broadcasts).

No need to go on our subjective impressions - I just added a video quality comparison section to the guide with a short (~25 secs) clip for download and comparison.

[AVeNVy]

Originally Posted by Olias

Well, I've got the 720p capture working. My setup required a couple of changes from AVeNVy's recommendations.

1. The file I registered in step 8 of the prerequisites was named "proppage.dll" not "propage.dll".

2. My Declink video capture settings were set to HD720 59.94p 8-bit 4:2:2.

3. I got a video playback error in Sage when trying to use the Cyberlink mpeg decoder. I had to use Sage's.

Now I just have to get the thing to change channels.
I have been using Sage's DirecTVSerialControll.dll to channel change on my sat tuner. But it appears that I can't use it with this tuner, I have to use either girder or some other external executable.

Per your results I decided to spend some time this weekend taking another look at encoding @720p. I started with your suggested setup (ATI encoder @720P and Sage decoder) but unfortunately encountered some issues. On initial observation things were looking great with a variety of content. However, I have a specific test I like to do that has always been troublesome and was what finally brought me to the Cyberlink decoder and Overlay - watch just about any sports in HD with a horizontal scrolling ticker. The Cyberlink/Overlay combo is the only combo I've found that displays scrolling text properly - every other combo I've tried shows a strange ghosting problem. You can also notice the problem in just about any object moving horizontally across the screen (watch the basketball heading toward the rim during a foul shot, for example), but it's much easier to spot with scrolling text. I'd be curious to know if you notice these same artifacts. Using the Cyberlink decoder did resolve this issue but things were not nearly as stable as with 1080i content - for example, after changing channels a few times, sometimes strange artifacting would start to show up in the videos or Sage would just crash all together. I also noticed that, as I mentioned before, the ATI encoder does something strange with progressive video. When you look at the mpeg-2 file created with the ATI encoder with mediainfo you'll notice it reports a framerate of 29.97 and a resolution of 1280x1440 (or something similar, not in front of the box right now) when it should be 1280x720 @59.94.

Now for the good news - after toying unsuccessfully with 720P input, the ATI encoder, and a variety of decoders I noticed there was a Sage encoder I had not experimented with before - the "SageTV MPEG-2 Video Encoder-Pro". I don't know how recently this encoder was added to Sage but I know it wasn't there when I started down the road of HD capture. After a bit of work, I was able to get the "Pro" Sage encoder working great for 720P. The Sage encoder also supports higher bitrates and has way more tweakable options than the ATI encoder. In addition, I was also able to replace the ATI muxer and the SDBADump file writer with the SageTV Mpeg Multiplexer, resulting in a simpler graph. I also discovered a much simpler way to capture AC3 when using the Sage muxer. Oh yeah, and when using the Sage encoder, I had much better success with both the Sage and Cyberlink decoders and was not restricted to using overlay with the Cyberlink decoder. The only down side I've found so far is the Sage encoder does require quite a bit more CPU than the ATI encoder - encoding a single 720P stream on my Q6600 is taking up to about 43% CPU usage whereas the ATI encoder takes closer to 20%.

So, thanks Olias for motivating me to re-visit some of this stuff as I now have 720P cap working perfectly, a much more elegant graph, and more decoder options! I'll update the guide with this data as soon as I get the chance, along with some more content for image quality comparisons.

Again, when you get the chance, it would be great to know if your results are similar.

[serpentine]

This is a great post. But, Can you elaborate on the Haupage Card you were refering to that may allow Component recording?

[GKusnick]

It's not a card, it's an external USB device, and there's a whole thread about it here.

[Olias]

Originally Posted by AVeNVy

...
So, thanks Olias for motivating me to re-visit some of this stuff as I now have 720P cap working perfectly, a much more elegant graph, and more decoder options! I'll update the guide with this data as soon as I get the chance, along with some more content for image quality comparisons.
...

Glad I was able to point you in the right direction. I've been spending quite a bit of time trying to get Sage to serially change channels and have finally met with success. In the past, I was channel changing using a modified dll from Sage tech support (those guys/gals are great!).

But now I had to find a way to do it via a DOS command. After trying several external serial controllers, I only found one that worked, Kevin Timmerman's DirectvControl. But it operates via a web page. I ended up hacking a VB script that opened Internet Exploder invisibly, changed the channel, and then closed.

So with that out of the way, I could look at image quality issues. I too found that the CyberLink decoder was MUCH smoother in playback. My issue with it now is that it will not render captured video from my AverMedia A180 tuner which I use for HD OTA captures. It just shows a blank screen. This weekend I'm going to set up the DTV tuner to capture the OTA stuff. That means for now that I won't be able to record OTA at the same time I'm watching DTV, but I can live with that. I've got a second DTV tuner that I'll add to the mix when I get everything else working.

I too am experiencing crashes intermittently with the CyberLink encoder. I'll try out the Sage Encoder-Pro this weekend. If you have a chance, please post your working settings from this encoder. I'll post mine (if they work).

[Olias]

I've come to a couple of conclusions during my testing. Even though I have a fast processor, AMD x2 6000+, the embedded x1250 graphics chip just doesn't have enough muscle to display video while recording. No matter what settings I used, Sage would eventually crash on me while watching live TV. I can watch any number of recorded shows and it works perfectly.

My plan is to use this box as a server only when the HD extenders are available but I can't be sure how long that is going to take.
In the meantime, I'll be trying out a 2600XT card to see if it can offload enough video processing to remain stable.

[Olias]

Ahhh, sweetness. I've got Sage on a server in the basement recording in HD now. Picked up a HD media extender for the main TV and it all works great. I've got a sound card on order with spdif inputs so that I can use it instead of the analog stereo inputs of the Intensity Pro.

I still haven't decided whether or not to get another extender when they're back in stock or build up a PC for the second TV. The extender is quick and (relatively) cheap but the PC would allow me to surf the web in addition to using Sage.

So many ways to spend that tax refund...

[sagetvian]

wow, thanks for this excellent post!!

Ever since I purchased the Blackmagic Intensity Pro, I never had a chance to capture 1080i through component properly, so looking forward to the Hauppauge solution soon.

In the meantime, I have several questions for the above procedures:

1. What is the quality of capture through Adobe Premiere Pro or VirtualDub?
2. Is there a way to capture directly into some kind of x264 codec to save file + retain highest quality?

3. If not, what are some of the good methods to "transcode" (I guess this is the word?) the mpg2 files into x264 files in .avi or .mkv once captured successfully?

Thanks so much for your feedback!

[Olias]

Originally Posted by sagetvian

wow, thanks for this excellent post!!

1. What is the quality of capture through Adobe Premiere Pro or VirtualDub?

I have not tried it with either program.

2. Is there a way to capture directly into some kind of x264 codec to save file + retain highest quality?

You should be able to do this using Graphedit. I did not choose to go down that path (just got more storage instead). Since my purpose was to capture for Sage, I didn't want to have to figure out how to get it to play.

3. If not, what are some of the good methods to "transcode" (I guess this is the word?) the mpg2 files into x264 files in .avi or .mkv once captured successfully?

I'm not expert at transcoding. There are other more knowledgeable folks out there that might be able to answer that either on this forum or over at avsforum.