Long video clip stabilization with ffmpeg and vidstab
Ad 1:

Presets have (almost) no impact to the quality — their purpose is for adjusting the trade-off of encoding time for the output size (the longer encoding time, the smaller the output stream).

Different presets enable / disable separate algorithms for compression. For example, in my installation, the -preset ultrafast is equivalent to options

--no-8x8dct --aq-mode 0 --b-adapt 0
--bframes 0 --no-cabac --no-deblock
--no-mbtree --me dia --no-mixed-refs
--partitions none --rc-lookahead 0 --ref 1
--scenecut 0 --subme 0 --trellis 0
--no-weightb --weightp 0


As you can see, almost no optimization, i. e. the output will be very large.



Ad 2:

H.264, aka MPEG-4 Part 10, aka Advanced Video Coding (AVC) is good enough, and its particular implementation — x264 library — is a very good one.

The pervasive rule is again the same: 


  Recent video compression standards are able to reach a little better compression than their predecessors, but for longer encoding time (and sometimes for lesser compatibility with media players, too).


So if you don't need cutting-edge compression, every contemporary compression standard is good enough.