You have probably checked this out, but heres whats happening for me...
I am using the latest handbrake "HandBrake 0.9.2"http://handbrake.fr/?article=download
It allows you to rip direct from dvd disc, and supports new things like the ahem Windows version:
"### Source Options-----------------------------------------------------------
-i, --input <string> Set input device
-t, --title <number> Select a title to encode (0 to scan only,
default: 1) -L, --longest Select the longest title
-c, --chapters <string> Select chapters (e.g. "1-3" for chapters
1 to 3, or "3" for chapter 3 only,
default: all chapters)"
-s, --subtitle <number> Select subtitle (default: none)
-U, --subtitle-scan Scan for subtitles in an extra 1st pass, and choose
the one that's only used 10 percent of the time
or less. This should locate subtitles for short
foreign language segments. Best used in conjunction
-F, --subtitle-forced Only display subtitles from the selected stream if
the subtitle has the forced flag set. May be used in
conjunction with --subtitle-scan to auto-select
a stream if it contains forced subtitles.
-N, --native-language Select subtitles with this language if it does not
<string> match the Audio language. Provide the language's
iso639-2 code (fre, eng, spa, dut, et cetera)
-m, --markers Add chapter markers (mp4 output format only)
I am using the Mp4 encoding and just saving the file as .avi cos I cant be bothered with any other file types.
It allows AC3 (5.1) and supports down mixes to whatever stereo you have ... 2.1 or 2 channel etc.
Maybe this new version will solve your problems?
I rip at about 2000Bitrate and i get a good picture on my projector, compared to 2500 bitrate for Handbrake 0.9.1 - so theres definitely an improvement. I take the files as large, because thats where i want to view, on my projector, in best possible scenario. For the kids cartoon dvd's i rip at about 1200 although that may be lower, but still looks ok on the projector.
For hi quality animation I use the 1800 to 2000 bit rate.
PS: I have not looked into the seek/chaptering (tend to get ready and watch from beginning to end!)- but the ability to rip from DVD disc is nicer than using dvddecrypter to .Iso image the disc first, then encode.
I also have a small script that will strip every title off, in case there are multi-title/movies on the one disc.
It also seems to overcome most of the encoding issues with encryption (of all my discs so far I have only had a few issues - One of which was "The Lion King" I too am rip/coding all my dvd's I am forced to .ISO using dvd decryptor as no matter what i ripped, there was no audio!
I saw little difference with using the x.264 and when i checked, the MP4 method produced a slightly smaller file
I have it scripted to save typing, but havent implemented it automatically yet - on disc insertion/via menu - that would be cool