Here I was all set to be the first to report on the same thing you so brilliantly put your finger right on top of, and beat me to the punch.
After Googling and studying Guides on VCDHELP, with some agonizing trial and error, I used VOBSUB to learn the OCR codes followed by a SRT conversion from IDX/SUB format. Then, I used DVD Lab Pro to edit the few errors. I did a CXD conversion from PAL -> NTSC. Then I demuxed the streams created by CXD. I used DVD Lab to use the MPEG, AC3, and Edited Subtitle file, and re-compiled with the subtitles in perfect harmony.
Although I could have compiled the SRT subtitle directly into CXD, I elected to opt for the greater latitude that DVD Lab Pro affords in its cosmetic extensions to subtitle processing.