1. No fansubber ever intended their releases to played on any other device than PC to begin with (well, there are few groups that have done PS3/360 compatible H.264+AAC in MP4 hardsubbed releases, but these belong to a very small minority). If you have problems with this, it's not the fansubbers job to solve it. Besides, converting really isn't that hard with proper tools. I suggest you learn to use MediaCoder.
2. HAHAHAHA OH WOW. Learn to use VSFilter (hint: it's included in CCCP). Also, softsubs look a lot sharper than hardsubs ever will, unless someone decides to waste even more space for hardsubs than they currently are wasting:http://forums.animesuki.com/showpost.php?p=1380948&postcount=57http://forums.animesuki.com/showpost.php?p=1384273&postcount=59
3. You can extract stuff from MKVs with a few mouse clicks if you aren't an idiot. See MKVToolNix.
4. Then learn to convert. Like I said, fansubbers never intended their releases to be played on any other devices to begin with, so this completely your own problem. Also, I have a PSP, and occasionally I convert softsubbed MKVs for it with no problems. I don't convert HD releases though, since I don't want to watch originally 1280x720 HD video on a 480x272 screen. SD content is fine, though. Picture related.