This paper presents a new distortion control scheme with a simple estimation model for the propagation errors incurred by dropping some parts of the bitstream in a frame dropping-coefficient dropping (FD-CD) transcoder. The primary goal of this paper is to facilitate bit-rate conversions and rate-distortion controls in the compressed domain without introducing a full decoding and reencoding system in the pixel domain. First, the error propagation behavior over several frame sequences due to coefficient dropping is investigated on the basis of statistical and empirical properties. Then, such properties are used to develop a simple estimation model for the CD distortion accounting for the characteristics of the underlying coded-frame. Finally, the proposed estimation model allows us to determine the amount of coefficient dropping and to effectively allocate rate-distortions into coded-frames. Experimental results show that the proposed estimation model accurately describes the characteristics of propagation errors adaptively in the compressed domain and can be easily applied to distortion control over different kinds of video sequences.