It records MPEG-4 just fine.
It's just that playback on any but the latest fastest PCs is a b****. The PC world is firmly entrenched in VC-1/WM-9, and the software players to handle AVC/H.264 seem to be slow coming. I use Elecard, but it's definitely got issues. By the time I get set up w/ a dedicated HTPC, hopefully some of this will be resolved by faster/cheaper hardware, improved acceleration and graphics card drivers, and better software player support...but none of this has anything to do w/ the R5000. It's the 'state of things' w/ MPEG-4.
The only other real functional downside, you can't archive the MPEG-4 content to D-VHS, which I'm doing w/ some of my MPEG-2-based recordings.
And, yes, you have to own the 622 to have it modded. I own one and lease one. You can also buy a pre-modded 211 direct from them.
Believe me, I don't throw my money away unless I percieve real value--long and short, I'm building a library of HD content. Now. And I'll be able to enjoy those recordings on into the foreseeable future. I feel its money well spent--or I wouldn't suggest it to you fine folks.