1) The "play all" episode is not its own episode. It's merely a command to play all three episodes one after another.

2) Just because you think that the last two episodes aren't more visually complex than the others doesn't mean that it's necessarily the case. Those two episodes may actually require a higher bitrate to maintain the same quality level. I also don't think that anyone else is going to argue for lower bitrate encodes; I know that I'd rather have more quality available to me than less, even if it means that I have to compress it myself to back it up. With that being said, try using another transcoder and see if you get different results. Most (if not all) have free trial periods. You can also try using DVD Rebuilder, which will re-encode the video (as opposed to transcode) and might produce higher quality output than transcoders. DVD Rebuilder is free if you use one of the free included encoders.