Problem about transcoding

[dreamalan]

I want to use VLC to stream a video via UDP, so I need to transcode my video into ".ts" file firstly. However, I find that if I choose MPEG-4 as the video codec, the output videos are full of mosaics and very unsmooth. Moreover, if I choose MPEG-2 as the video codec, the "Bitrate" parameter doesn't seem to work. That is, no matter what the bitrate is, the qualities of output videos are almost the same, so are the sizes of output videos. Is this a bug of VLC, or my usage of VLC is wrong?

[VLC_help]

Does Tools -> Messages (set Verbosity to 2) complain something when you are transcoding?