I use Playback and it works great. I've never tried it with an mkv with two audio tracks or subs or 5.1 so I can't attest as to how it works but for single track audio with no subs, perfect. Only takes about five minutes per hour of video.
I'm guessing it's doing video passthrough and re-encoding the audio. You can also do batch files.
http://www.yazsoft.com/products/playback/take-the-tour/?convert
Before I found Playback I would use Quicktime Player 7 Pro.
Perian needs to be installed.
1. Load your MKV into Quicktime. Make sure its fully loaded once the timeline is dark gray.
2. Once loaded click file ->export.
3. Choose Export: Movie to MPEG-4, Use: Most Recent Settings.
4. Options: File Format MP4. Video - Pass through
5. Audio: AAC-LC (Music), 128kpbs, Stereo, 44.1kHz, Best
6. Streaming I left unchecked.
Once done just drag to iTunes and it works on AppleTV 2 and iPhone 4. I don't have anything else to check it on.
This works great for TV shows. Once you get into 5.1, I don't know how well this works or if at all. But if you don't mind stereo tracks for your TV shows, this method is guaranteed to work.
(or your money back)