Why do you want to transcode a blu ray? Any kind of transcoding (that saves space) will reduce picture quality. Isn't one of the reasons to buy Blu Ray or HD-DVD to have the best picture quality available? With disk space getting so cheap these days (about 24€ct a Gig), I don't see a need to sacrifice picture quality at all.
Well, watching a DVD on a (fairly) large screen really shows differences between a DVD rip on a regular single layer DVD disk, and the original. I want the best possible picture quality while watching a movie in my home theater. Watching on a regular TV set does not show much difference, but once to you go into larger sized screens you see a difference. And it annoys the hell out of me.
So, by going down from 3-8GB of data to a 4GB movie, I save about 1€. I am willing to pay this price to get the best quality possible.
When you have a few hundred movies like I do, and you want to put them all on disk, you are willing to give up a little quality in order to save a lot of space. Going from mpeg2/ac3 vob files to H.264/aac mp4 files gives me about a 5 to 1 compression at my current settings. The difference in visual quality on my crappy ancient 43" rear projection 480p HDTV is close to zero, although if I had a better TV I'm sure I'd notice and may even be unhappy. I have a 500G drive and with my previous settings as well as some straight vob rips I ran out of room. After the unconverted movies started to stack up I started reconverting to this new setting (it was divx/ac3 copies/avi). As I mentioned, I'm spoiled with having a library of movies I can grab a remote and flip through and just kick off a movie instead of hunting for the movie I want to watch or flipping through a book of DVDs trying to decide what I'm in the mood for.
Blu-ray will be a much bigger challenge, it's already in H.264 so I will not be converting to a much more efficient codec. I will also be transcoding with a new 60"+ flat panel HDTV in mind. However, at 30G per movie, I'd be looking at just over 30 movies per TB of storage, and that just doesn't work out very well. Correct me if I'm wrong, but I believe BR movies are at roughly 25Mbit/s, and OTA/Cable are commonly between 10Mbit/s and 15Mbit/s. There are a lot of movies where perfect video isn't that important and something like 10Mbit/s would be just fine for. Other movies where video is more important could be dropped down to the 15Mbit/s range, still as good as HD cable/OTA but less space. Until I get a 1080p hdtv and start testing I won't know for sure, but I envision being able to drop the total space to around 15G per movie, have much better quality than current non-transcoded DVD movies, and be satisfied with the results.
Movies that are not in Myth (soon to be linuxMCE) stack up on my desk waiting to be ripped, they just don't get watched. In the end, the ability to transcode BR movies is a requirement for me making the switch from DVDs. It's really too bad the big companies don't get this. If it were not for all the protections they waste tons of money on that will soon be useless I'd have already bought a BR drive and be buying BR movies.