Which HD Codec has most compatibility?

[triciclo]

Blu-ray supports the following three codecs

MPEG-2 - enhanced for HD, also used for playback of DVDs and HDTV recordings.
MPEG-4 AVC - part of the MPEG-4 standard also known as H.264 (High Profile and Main Profile).
SMPTE VC-1 - standard based on Microsoft's Windows Media Video (WMV) technology.

Of the choices above which one will be most future proof?
Is there one that plays back universally?
Which one offers the best image?
Which Codec has the best tools for encoding a chapter based Disc?

Encoding compatible BluRay's will be quite a science, it looks like it!

[STORMDAVE]

Not even the high end compressionists have the ability to maximize the use of the newer AVC & VC-1 codecs...they have reached a peak on MPEG2.

All these 3 codecs are supported by Blu-ray so compatibility is not much of an issue, and as Andrew mentioned, MPEG2 is your best choice right now.

[shueardm]

Also Mpeg 2 is easier to decode on a PC, so if you have a high bitrate Mpeg 2 video it will play on more PC's than the same bitrate version of AVC.
I don't know that you really need 35Mb/s, perhaps as a maximum yes, average with 2 pass is very good at 25Mbs.

[THoff]

You're also more likely to find hardware-accelerated MPEG2 decoding than H264 or VC1. That can translate into smooth playback even on systems that don't have high-end CPUs.

[STORMDAVE]

I have a few Blu-ray movies, and it seems that VC-1 is a bit softer than AVC & MPEG2...I looked around on the web and my estimate was right on. Many Blu-ray review sites state that VC-1 is a bit softer than the other 2 codecs, so that's another reason why I wouldn't use VC-1 right now. If I ever encode for Blu-ray, I'd use AVC & MPEG2 (The prior if I wanted to fit more data on the disc).