For a demonstration in a class I'm teaching, I recently assembled a video from a PNG stream with Sintel (except just the trailer, it was a more manageable size for the demo).
My example's a bit different, so bare with me.
The sintel trailer .png's came letterboxed (!) which I didn't want. Sidenote: I'm not sure why VLC gave you problems above, but it is generally bad to apply letterboxing to the video you are encoding. All video players I've ever seen will apply it automatically if necessary. It just complicates things further down the road, and will indeed make your video not compress as well.
Additionally, since I was preping this video for my demo (where I used lots of different types of compression on it), I wanted to get it into a continuous lossless format, usually I would probably use ffv1 or H.264 lossless for a lossless codec, but in this case they were part of the demo, so I'm just using raw video packaged into a y4m format
Here is the command that takes the stream of PNGs and strips off the letterboxing, then packs it up as raw video, 24fps:
Personally I've never gotten comfortable with specifying the video quality, I always like to try out different bit-rates and then look at different results to figure out what is "good enough" (to just try it on part of the video without encoding the whole thing use -ss to specify a staring point and -t to specify a duration). Without the video quality paramater (which I don't think ffmpeg supports), I can do it all at once:
I was a Software Engineer (that did some programming in C++/Python/(FORTRAN, god help us)) until Sept. 2010, when my wife and I moved to Montero, Bolivia to volunteer. Now I am teaching a class on Introduction to Multimedia (http://teeks99.com/multimedia-intro/MultimediaClass.html or https://github.com/teeks99/multimedia-intro CC-BY-SA) at the Instituto San Sebastian Pelczar. This class uses primarily free software for Photo, Graphics, Audio, Video, and Web Page creation/editing.
I have been running Linux since about 2002, and on my primary systems since about 2005. In general, I try to use free software, open formats, and creative commons media wherever possible.