I'm as surprised as you probably are, but I've got it working nice and easily with the EMBRACE patch. I'm not sure whether its because its a new version of TMPG, but it definitely works.
Will talk through what I've done:
Uninstalled previous version (TMPGEnc DVD author 3)
Removed folder from appdata/roaming.
Installed, let computer restart when requested. (please note, Kaspersky picked up an issue, but there doesn't seem to be any problem)
Ran program once, when at license key page, exit program.
Copy keygen to programfiles/pegasys/tmpgenc.
Run keygen, change version to current (126.96.36.199), first I clicked generate, and then patch.
Go to install directory (programfiles/pegasys/tmpgenc) set TMPGEncAuthoringWorks4.exe compatibility to Windows XP (SP3), and set TMPGEncAuthoringWorks4Batch.exe compatibility to Windows XP (SP3). Delete .bak files that are there for the above. Then, I ran the .exe file (copy to desktop first if you want) and it worked. For info though, it did change the windows 7 scheme to Windows Basic (where it goes lighter), and I'm running Windows 7 Ultimate Build 7100.
Hope it goes okay for you, the new features are cool. (at last, a create your button tool!!)