Did some encoding of a dvd first using MacTheRipper and then used Handbreak 0.9.1 and setup the avc encoder and went with passthrough ac3 saved it as an MKV after it was done no other player but vlc could open it and you could not seek. So I did the same encode but using the AVI container somewhat strange and it works. This problem probably has been fixed but since 0.9.1 is the last version created for PowerPC seems like the only option is to use AVI if I want ac3 passthrough. A bigger question is how the heck dose Handbreak even store AVC in a AVI container that their just blew my mind.