I've been begging for support of MKV and x264 files for the DSM-520 as well.
Sadly I've had to convert everything loosing some quality.
I've had alot of success using a program called AutoMKV, seems to be the most powerful and refined of the ones I've tried. The program does let you fine turn everything, so it may scare off those used to one click conversions.
http://automkv.a.wiki-site.com/index.php/Main_Page