[Dark Shikari]

ffmpeg -i inputfile -vcodec mpeg4 -qscale 2 -acodec libmp3lame -scodec copy -ab 128k output.mkv

That'll re-encode to MPEG-4 while copying the subs.

You can add an -s option to reduce the size if decoding is still not fast enough (e.g. -s 720x480).