They are burned into the VIDEO but the original format would still be whatever it was, I was getting confused cause it sounded like you were saying you had imaged based SRTs.
Here a more detailed explanation of those settings
Automatic – (Default) Burn in subtitles when the subtitle is an image-based format (e.g. VOBSUB, PGS, SUB/IDX, etc.) as well as for complex ASS/SSA subtitles.
Only image formats – Only burn in subtitles when the subtitle is an image-based format (e.g. VOBSUB, PGS, SUB/IDX, etc.)
Always – When used, subtitles will always be burned into the video, regardless of the original source type of the subtitle.
So this means the setting will either brun/not burned based on the SOURCE TYPE, so if you set always the SRT will be overlayed into the video so to speak (like a video on top of another) and this is super expensive to the CPU hence why it goes up to 100%, so that part is normal.
We’ve had more reports of SRTs failing to transcode in FreeBSD, I can’t repo it but if you could please add a sample (or DM it to me) and the XML info for that file it would be great (you already posted logs and it looks like the same issue as others), I’ve raised this internally and we are looking into it but so far the log doesn’t help much, I’ll have to repo it locally and the samples migh help.