It depends on a lot of factors. But even if it works in a virtual machine, your CPU is going to be pegged at 100% the whole time to handle the re-encoding. Unless you use a hardware h.264 encoder, but then the quality is pretty terrible since it's explicitly optimized for speed over quality and isn't tunable the way software encoders are.

It's always doable, it's just an option of last resort. You always just want to access the original compressed bitstream if possible.