Thanks for the reply.
I am testing it on a 5m10s DTV clip from the movie Arsenic and Old Lace recorded on Media Center. No trimming, no commercial skipping.
The reason for the short clip is to tweak the settings and not to spend hours encoding and not get the results I'm looking for.
I can understand your first two points but to lose the first 21 seconds doesn't seem right. Believe me, I watched the entire encode process and both passes started at 7% (which is 21 seconds of a 5 min. clip).
I guess I will have to take the plunge and try a longer clip and see what happens.