Best way to re-encode videos?
 

I downloaded AN AVI. The quality is nice but the screen is small I mean the black borders are too big so I decided to resize it:

I tried it with TMPEGEnc
I load the mpeg file and resized it but my problem is I dont know how to change the bitrates cause the only info I got about the source MPEG is the bitrate but I dont know how I should encode it : CBR or VBR and how should I set the bitrate.... like the source file ??
After I did like I said the action scenes were jerky and got clumsy pixels.
So how can I can resize the mpeg file without loosing quality??

THANKS!!!