Will this work on iPads or Apple TVs?
It depends on the nature of the h.264 tracks in the mkv files. I use MakeMKV to rip my BluRays directly to high bitrate 1080p MKV files. Then I use Handbrake to recode them down to the AppleTV2 preset. While my WDTV Live box can handle the BluRay rips, my AppleTV certainly can't.
If yor MKV's are downloaded 720P files, the h.264 streams may well be compatible with the AppleTV 2. I'd give it a try and see how it goes.