if you are on mac you need to select format: quicktime, then click on preset>edit export settings, and then there will be a new window where you can select your size, codec, and all the other stuff you need.
if these files are comming from an AVCHD-cam your field-dominance is upper first, but I wonder a little bit: what kind of software will your editor use?
premiere of FCP or maybe AVID?
premiere could import mts-files nativly, FCP could import them using the log-and-tranfer-window (if there is the entire AVCHD-tree). the only edit-suite I don´t know how it would work is avid, but I´m sure there is an option, too.
so why do you want to do this job with adobe media encoder?