I found my old encoding methods lacking ...so to keep the thread short...use mediacoder, load up the preset for converting your nit...works great. use with mplayer on your nit, voila. simple.
The other preset is for transcoding your films into the media, industry and gov't standard for film preservation. All the aspects of the preset are not only open source but at the top of the current heap of best codecs. MKV X264 AC3 at settings that are just right for fluidity of fast moving scenes. You can lower the vid rate but don't go lower than 1500 or you start compromising film integrity and the point of standards to begin with. Comparably a standard good xvid needs to be at least at 3500 vid rate to compete with how good it looks with the x264 at 2000 vid rate. You can go up in vid rate but going up to 3000 would be comparable to xvid at 4500 vid rate. Great if you want your finest film preserved well. Any higher and you may not see a diff tho.
At 2000 vid rate the "average" is a GB per Hour of Film. So you can gauge how big a file will be thus.
It will improve the quality of your copies...but it cannot do miracles.
If you have truly crappy copies ....after transcoding will just look crappy (but at least they don't look truly crappy ).
So grab your best copies and enjoy.

-endsormeans