Using VLC 1.1.9 on Windows XP Pro SP3 I converted a MJPEG movie (made by a Nikon COOLPIX S5100 camera, 720p30) to MP4 using the H.264+AAC (.mp4) profile.
After conversion, playing the resulting file with VLC gives a lot of compression artefacts and picture errors (the original plays fine - except a bit stuttering, too weak CPU, I guess : Athlon XP2200+).
Feel free to ask for more details.