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>Am I not allowed to use Mpeg 2 in trial version?
That is correct, MPEG 2 is not available in the trial version.
>How can I fix this?
Unfortunately, you have to purchase PPro to "fix" it.
...and the Media Encoder works just as it did in previous versions. (No Batch Encoding still!)
I haven't tried it, but I know people who have...
... is a free solution for batch exporting which recently got updated for CS3 support.
The reason is in the licensing. It costs Adobe for every application it gives out with MPEG2 capabilities. That's hardly cost-effective when you're giving it away for free. Your beef is with the Motion Picture Experts Group, not Adobe.