Big question here, if I didn't know what I was talking about, why are you essentially telling Norkle to do exactly what I said to do? I said demux the MKV into its separate parts, verify that those parts are supported by the PS3, and remux it as something the PS3 plays like MP4, AVI or MPEG.
The problem with MKV files is that their contents can't always just be remuxed.
It's a container format, so you could have just about any codec toss its output into it.
So...as someone who knows what they're talking about, you must find out what type of video is stored in the MKV to determine if it must be transcoded before remuxing it. I convert movies rather often, so I do have a decent idea of what needs to be done. What needs to be absolutely determined is what is stored in the MKV.