In previous techniques of bit rate reduction transcoding, reusing the mode of the input MB is widely adopted. However, directly re-using the mode of input MB will cause additional losses for H.264 bit-rate scaling. Variable-size block-matching based motion estimation makes H.264 much more efficient than other coding standards while increasing its complexity. As the target bit rate changes, the best mode of the MB may also change. In this paper we concerned two key techniques for H.264 bit rate reduction transcoding: Mode decision and rate control. A fast MB mode decision algorithm and an improved rate control algorithm depending on statistics of input streams is proposed.