As I said before, as long as you have Perian installed so that Quicktime will read MKVs and render the subs for you,
Visualhub:Advanced:Force:QuickTime Decoding.
This does work, it does burn the subs in, and it does create whatever type of file you would like. A couple of things I've noticed after going mkv crazy over the last 6 months or so....
1. Do not encode in h.264 while you have the "Force:Quicktime Decoding" box checked, Quicktime has some sort of a ridiculously stupid problem where it washes out colors when encoding in h.264. If you need the files to be in h.264 format, I would suggest first re-encoding with the "Force:Quicktime Decoding" box checked, but the "H.264" box unchecked, after that conversion is done (depending on the size/length of the file this can take around ~200 minutes for a 20 minute episode, and that's on a 2.53GHz Unibody MacBook Pro.), you will want to UNCHECK the "Force:Quicktime Decoding" box, take your new file (so say before you were converting "episode123.mkv" to "episode123.mp4", now you will want to be converting "episode123.mp4") and re-encode it AGAIN, with the "H.264" box checked, this should leave you with an H.264 type file, that was once MKV, with the subtitles burned in, and not looking like crap.
Also, something to note. I'm not sure why, and I haven't quite found a work around for this yet, but occasionally when you are re-encoding using the "Force:Quicktime Decoding" method, the files will come out with what I like to call "jaggies". The only fix (with good looking subs..) I've found for this so far, is to find an alternative release of the same video. Up until last night, I had only ever run into this issue with SD videos, but last night it actually happened to me with something that was encoded in 1080p.

You could also settle for re-encoding these files using MKVTools (which I mentioned previously), but your subtitles may or may not come out looking nice/easy to read.
I hope this can be of help to somebody, as I've been wrestling with MKVs for years, so I definitely understand the frustration some of you must be feeling. I'll subscribe to this thread so that whenever somebody finds it and responds I'm actually notified.
Take care all, and if somebody figures out a work around for the "jaggies", I'd much appreciate some help there!