Why was MKV support not built-in? I understand the issues surrounding OGG support, but surely MKV does not have the same issues?

That said I think all the MKV files I have seen are 720p, SD people usually seem to prefer XVID/DIVX than H264. That said I am not even sure why MKV is preferred over AVI or MP4 containers (perhaps MP4 as it has patent issues).