I have faced the same problem as I upgraded to 2.1.7, there is no transcoding option on the WebIf and also it doesn't stream through my iPad using VU+ PlayerHD.
any help will be appreciated.
I might downgrade to 2.1.6 or lower version to check if I can get better transcoding quality.
Right now, it doesn't work meaning when I transcode a channel through xbmc, I can view/change channel on my stb. It used to be working fine before.