Yeah, it's just MPEG2 and, yeah, that's pretty ridiculous for an MPEG4 receiver but keep in mind, it's still beta... since 2008 I think.

The MPEG2's audio has to be in a certain format too which is NOT the typical MPEG2 OTA broadcast format (don't remember the details here). Despite this, it will actually try to play my MPEG2 recording from Media Center OTA via Tversity but chokes on the bitrate (actually says bitrate too high).
It also only takes jpg but the free version of Tversity seems to handle anything I've thrown at it image wise.
It also only takes one format of audio files but I can't remember what that is. Again, Tversity does a good job of taking care of that for me too.