The included batteries will last about 3 months (of regular use). But Apple gives you Premium Energizer E2 Photo Lithium AA batteries. If you decide to use regular alkaline batteries, they won't last as long.
MPEG-4 is NOT open source. It is an open standard. A company (or person) has to liscense the technology from the owner to use it, and I don't believe (correct me if I am wrong) they can tinker with the actual codec (not referring to the settings, the actual technology).