Forgot to mention, I'm using CS5 and I shoot in avchd, 30fps,
It depends on your footage, so the best thing is to use a BD-RE and try both H.264 and MPEG2 and judge for yourself.
Maximum compatible bitrate determines how much space is used for shorter timelines, just like with DVD. A 30 minute timeline will not fill a DVD5 for more than half, because that would require bitrates much higher and DVD players can not handle that. Same with BR.
What is '-RE'? (taken from 'BD-RE').
Also, what is the range of bitrates that offer excellent quality and that are fall within the BD standard?
I know that the max bitrate for the DVD standard is 9.8 Mbps but have no idea about the BD standard.