As a summary for those who may find this thread and be looking for answers. While the subject is HOW TO PLAY MKV AAC/AVC WITHOUT TRANSCODING, my purpose in doing this was to archive bluray rips for playback directly or via PS3 Media Server. For this reason I want all the audio tracks (including lossless formats) and the movie subtitle.
The way I produce bluray rips to MP4 (using Handbrake) subtitles burn in. Otherwise the MP4's can be played fine (without transcoding).
Similarly for mkv's, PMS only seems to be able to do this by transcoding.
So my problem was how to include multiple audio tracks, as well as subtitles. My choice was to stick with MP4's (so PMS can stream them without transcoding) but download'ing a SRT subtitle from opensubtitles.org http://www.opensubtitles.org/en I'm simply going to keep the SRT external, but Handbrake does allow a SRT subtitle to be embed'ed in the MP4.
For those using Handbrake you may not have been aware of the Preference in Audio and Subtitles to SHOW ADVANCED AUDIO PASSTHRU OPTIONS. Once I enabled this I was able to mix the movie audio to AAC 7.1 1.5Mbps, as well as pass through the original lossless track and any additional features audio tracks like director's commentary.
Hope this recap helps others know what is possible (and what isn't).