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I was using the same method as you. Recently did I purchase Sorenson Squeeze. I Export|Movie as an .avi from PPCS3 and then move over to Sorenson. It provides a host of MP4 options. I never was able to use Adobe Media Encoder. I know this doesn't really help you but at least its an alternative.
I'll keep an eye on this post in hopes that someone knows the trick for creating MP4 files directly from PPCS3.
What are your settings when exporting the AVI from CS3?
You can go straight from a CS3 timeline to H.264
Just do FILE EXPORT ADOBE MEDIA ENCODER
Then, in AME, just select H.264 from the Format:drop down.
If you want a MOV file using H.264, then Select Quicktime from the Format: drop down, then select H.264 in the Video Codec: drop down.
Adobe media encoder doesn't allow for "Fast Start" of .mov files. I've only found QT Pro to have that feature.
It's essential when viewing 80mb movies on the web.
I had this problem and could find no way from Adobe media encoder to get a qt movie that would fast start - when on the webserver they always needed to have the whole thing downloaded before starting to play. I used squeeze eventually. Is there a way to convert a AME produced qt movie to fast start? I think i tried to re-export the mov from QTPro with fast start settings and it would still not fast start.
Scott - do you use AME then QTPro and it works?
Bring your sequence into After Effects (if you have it). It offers the fast start option. If you plan on using H.264 within Flash player, select hinted streaming instead.
I just use the export movie function within Premiere and use Microsoft AVI, compressor is set to None.
I then open in QT Pro and export as H.264.