Guys, I hate to break it to you, but DVDs do not use H.264 encoding, which, from frame-to-frame, only encodes the changes between each frame. I understand H.264 is part of the Blue-ray standard, but for some reason they don't seem to make much use of it in Blu-rays either.
I just encoded the main .mts file ripped from "The Host" Blu-ray last night. The main .mts file was ripped at 1080p with DTS audio, and from a 32 GB .mts file was encoded down to 3.3 GB (90 minutes with my i7-4770k). Now, having said that, I will admit that in a few scenes where the background was very stationary, 1 hour 23 minutes at one point, 1 hr. 48 minutes at another, the stationary background got a little fuzzy because it was essentially frozen (nothing was changing in the background between frames).
So I re-encoded it with HandBrake again, this time increasing the quality level and slowing the speed of the encode (also increases the quality). It took almost five hours with all eight logical cores running 100%, and it came out at 7.7 GB in size, but the quality of the encode was completely indistinguishable from the original 32 GB file. I kid you not. When I encode a DVD movie at 480 at normal HandBrake settings, the resulting file is 20% the size and no difference in quality.
I believe H.264 is patent-protected and costs a royalty to use, but HandBrake, like VLC Media Player, is an open-source French application, and the French are well-known for not enforcing all video patents. That's why VLC will play DVDs, and HandBrake can use H.264 for video encoding.