Probably, but it's their caps. Again, anyone that doesn't like it is free to do their own capping. I'm actually surprised there people that watch SD files. With that said, it sounds like for those that are doing that much streaming to incompatible devices, they could set up a cron job to automatically convert MKV to MP4. It'd take 45 seconds per file, but require no manual intervention by the person that required MP4.
Honestly, it's an awful lot of bitching about stuff that's free (and of questionable legality).
IMO, people overrate the importance of HD. 2 minutes into a show, I forget it completely, so I encode all my stuff to 540p. Not only that most people have their TV so far from their couch, that the difference is pretty minimal, or they are watching them on phones.
It isn't just streaming. PS3/PS4/Apple Devices, and who knows what else don't play MKV (Xbox?) natively. And a lot of people won't know how to convert. You don't want to automate converting too much because, you don't want to convert all MKV files, some files actually need to be in MKV containers.
The annoyance this causes to people using these files, on now incompatible devices, will probably be meet with giggles by scene wankers who will probably responds that they should be running VLC on Linux.