How can I insert a censor bar into a mp4 movie?
Any decent video editing software will allow you to specify bitrate and resolution in export settings. Sony Vegas Pro or Movie Studio, Adobe Premiere Elements, as should Cyberlink Powerdirector among others.

For a 2 hour movie with 700MB as output size, you want a target or average bitrate of 670 kbps for the video and 128 kbps for the audio.