>Because there would be a clear quality loss. The websites they're ripping from (amazon, netflix, whatever) are using H.264, and to recode into H.265 would lose significant quality.

This is wrong for two reasons: the source codec doesn't matter (it gets decoded to raw yuv420 first anyway), and netflix/amazon/UHD BluRays already use HEVC for 4K which I alluded to earlier.