Does it record to two files if the shows overlap (due to begin/end padding)?
Yes. You can create up to five virtual tuners per tuner card, which will solve this problem.
I hope you are joking... right? That's the 'sollution'? And then people wonder why I rant that it's a configuration hell?
The virtual tuners are brilliant. You can use a single tuner card to record multiple channels off the one Digital stream. That means if you have 2 virtual tuners set up on your one physical tuner card you can record two shows one after the other with the padding you have set for each show. And if the station is broadcasting multicast stations, you can record two of those multicast stations at the same time.
This is exactly what you are asking for. There are plenty of howto's on setting up the virtual tuners.
I've run Windows MCE XP, Vista, Win7 and MythTV. It took me all of about an hour to set up MythTV the way I wanted (yes, with virtual tuners too) following the howto's. Sure I've played with linux desktops before, but I wouldn't call myself an expert by any means.
MythTV has issues (which is why I'm using Win7 now, it is really nice but I miss some of the MythTV features) but it is a work in progress. It does some things much better than the alternatives and some things worse.
If you've had so much trouble with virtual tuners, perhaps you should stay away from MythTV until version 1.0.