FYI for ya'll
I just bought Avatar for the family. I went to
http://www.dvdfab.com/free.htm, and downloaded "DVDFAB PassKey 7". This removes encryption so I can rip my movie. I installed PassKey and inserted my dvd. Then using Badaboom, which works with Nvidia video cards to transcode video fast, I transcoded Avatar in less than one hour and am now watching it on my Droid. Now, ATI has a transcode program also, there's is free, and can be found on there web sight. If I get time I will do a trial run on my Ati machine also.
The settings I used on Badaboom are:
Select PSP on the right, select the drive your movie is in on the left.
Click Advanced, top right.
Video Decoder tab: check mark all
Video encoder tab: Profile=baseline Key frame mode=fixed
Level =Auto Interval =80
R.C.S.=Constant Q
Move the slider to Highest Quality
Pic Tab: Display Res=720x480
Aspect R.= Fill to Aspect(this is important)
Output Res. will read=720x404
Film-mode=Auto And checkmark "Deinterlace"
Audio Set. tab: Audio mix=Stereo Downmix
Audio Channel= English(D.D.)6ch
Audio Bitrate slider= far left 128
These setting may also help if you are using some other transcode program such as Handbrake or Super, which are free.
Good Luck