Hey Guyz ,
After Long Searchin And Researching I found a satisactory Converter For our N900 Videos For smooth playback of MKV in 600mhz.

Yes I cant Say its useful for everyone but try it out :

MKV Converter Studio

Its a good app which gives satisfactory results in less size [ ofc MKV]

Needed Apps On Device :
Extra Decoders Support
Any Video Player Of Ur Choice.(VLC Media Player Is Recommended if Soft Subbed Using MKVmerge)
Subtitles Support (If Needed)

So Lets Start Converting

First U Need:
MKV Converter Studio
MKVmerge for muxing subs
It Has Own Subtitle and audio track selection

About Profile:
Choose Any Profile
mp4 or mp4/avc or mkv
then choose bitrate of 275-500 (Avg Size) Or as u wish
Then audio i say 48 or 92 kbps is fine
framerate to 25
Resolution 320x240 or 480x320 is fine
and other options etc
and there u go U have a good quality Video output ..