Drag and Drop to Batch Convert Videos Using FFMPEG

Question

I've created this simple Applescript that will run an FFMPEG command in the Terminal (which I want to show so that I can see the progress) on files dropped on the MTS to Cropped MPG.app icon:
on open filelist
          repeat with i in filelist
                    tell application "Terminal"
                              do script "/Users/Lapaki/Desktop/MTS\ to\ Cropped\ MPG.app/Contents/Resources/ffmpeg -i " & POSIX path of i & " -vf crop=iw-360:1080:180:0 -f dvd -vcodec mpeg2video -s 720x480 -r 29.97 -acodec ac3 -ar 48000 -ab 448000 -async 1 -aspect 4:3 -b 4500000 " & POSIX path of i & ".mpg"
                    end tell
          end repeat
end open
I'd like to make this app portable so that I can share it or move it around as needed, so I put FFMPEG inside the Contents/Resources folder inside the app. The obvious problem is that the script will break as soon as I move the app to a different location. Is there a way to write the dynamic path of the app itself, no matter where it is moved, so that the app won't break when shared or moved?
This script also only works on a single video file. What I'd really like to do is drop a folder (which will always be called "mts") onto the app, and have the script create a new folder called "mpg" in the same directory as "mts", then batch convert all the .mts files in the "mts" folder, placing each new .mpg file into the "mpg" folder.
I'd also like the .mpg files to retain the same name as the .mts files, but instead of just appending .mpg, I'd like the .mpg to replace the .mts extension. So 00001.mts would be 00001.mpg (not 00001.mts.mpg as the current script generates).
Any help here would be much appreciated.

Answer 1

Tony,
quoted form of worked perfectly!
Now to the batching...
In my case there will never be nested directories. There will simply a folder called "mts" with at least one, but perhaps many .mts files, all named sequentially (00000.MTS, 00001.MTS, and so on).
So I'm having trouble figuring out how to integrate this:
on process_files_(fs)
          repeat with f in fs
                    tell application "System Events" to set finfo to the properties of f
                    if kind of finfo is "Folder" then
                              tell application "Finder" to set dirList to (items in f) as alias list
  process_files_(dirList) -- recurse directories
                    else if tolower(«class extn» of finfo) is not equal to "flac" then
                              tell me to activate
                              tell me to display dialog (name of finfo & " is not a Flac file") with iconcaution giving up after 2
                    else
                              try
                                        with timeout of 30000 seconds -- plenty of time
                                                  my itunes_convert_(f)
                                        end timeout
                              end try
                    end if
          end repeat
end process_files_
With this:
on open filelist
          repeat with i in filelist
                    tell application "Terminal"
                              do script quoted form of (POSIX path of (path to me) & "Contents/Resources/ffmpeg" as string) & " -i " & POSIX path of i & " -vf crop=iw-360:1080:180:0 -f dvd -vcodec mpeg2video -s 720x480 -r 29.97 -acodec ac3 -ar 48000 -ab 448000 -async 1 -aspect 4:3 -b 4500000 " & POSIX path of i & ".mpg"
                    end tell
          end repeat
end open
Again, it would be great to just drop a folder called "mts" onto the application, and have it convert all the .mts files inside and put them in a new folder called "mpg", which would be in the same directory as the "mts" folder.
Any way to make this happen?