Yup, it can do mp4 and MKV containers. I prefer mkv myself because you can toss a ton of stuff into them quite easily. I also use other tools like mkvtoolnix from time to time - try some of these other ones and you'll no longer be complaining about the Handbrake UI.

So, if your source has an AC3, you will select AC3 Passthrough. If it has DTS, you may be screwed with the Handbrake UI. Even if the underlying encoders can handle it. You can try one of the other options and then set the mixdown to 6 channel discrete.