I guess I can tell you my work flow, and you can take it for what its worth!
I use Make MKV to rip the disk into MKV format. I then check to see if the audio is in AC3, if not, I use an media transcoder, to convert any audio that doesn't show up as DD, (dolby digital audio.) The transcoder I use is "iMedia Converter", but any audio transcoder that can convert to AC3 would be OK. I convert to AC3 using these settings in iMedia Converter, AC3 - Dolby Digital AC-3 / 6 audio channels / bitrate of 448000 and a sample rate of 48000. Hand brake will convert on the fly to AAC surround sound, but AC3 is way better AAC, not to mention the file size for AC3 audio is way smaller that DTS or any HD audio source, (even though the quality of HD audio is better that AC3) the trade off in quality is small for the amount of space you will save on your media server.
Once the audio is converted to AC3 audio, us use MKV Toolnix to combine the original MKV file with the AC3 audio that I just converted. I also uncheck the old audio track that shows up in MKV toolnix, (when importing the MKV file you created with Make MKV.) While in MKV Toolnix, I move the position of the AC3 track, to be between the movie track, (always shows up at the top of the list, of the imported MKV file) and the PGS Subtitles track. So, the list would read top to bottom, movie track, Old audio track, (unchecked, turned off) New AC3 audio track, PGS subtitles track, and then the Chapters track at the bottom.
At this point you would pick your destination to write the file to and then click the "Start Muxing" button. The file that is created would then be used to encode from, using Handbrake.
Handbrake allows you to use presets that come with it and I use the Apple TV setting. I did modify the picture Setting of Handbrakes Apple TV from its default of an anamorphic 967x544 to "None" for anamorphic and the window size manually set to 1280x720. Other than that, I used all of the original settings for the Apple TV preset. The picture quality is excellent and the file size is always between 2 to 3 GB, for a two hour movie.
Just so you know, Handbrake's modified presets can be saved as your own custom presets.
If you need subtitles, you will then need to convert those to VOB format. PGS is all that is used in blu-rays and does need to be converted to VOB format using other software not mentioned here, but I did cover that in another post here:
http://www.makemkv.com/forum2/viewtopic.php?f=6&t=2383. Handbrake can take forced VOB subtitles and burns them into movie image, so that they show up on any media player you wish to play the handbrake encoded files on.
Hope this is of some help!
