Watchable quality is in the eye of the beholder.
I used to be real uptight about perfection. I'd watch my encodes with a mircroscope, and my freinds thought i was comming down from drugs and hallucinating bugs and blocks on my my TV
Then I leaarned to be realistic. I mean, look closely enough and I can point out artifacts and flaws in source DVDs.
Considering the movie length and the file size, I've had alot of nice encodes that don't hurt my eyes using the kwag matrix and gop.
And none of my non-encoder freinds ever complained.
Neither have I.