Video transcoding has suddenly become an important criterion for me when judging CPU performance. The reasons are my latest hardware additions: a Google Nexus 7 and a Western Digital TV Live. The former is intended to allow us to access the multimedia content on our NAS from everywhere in our home, and the latter should deliver this content to our TV. Both of these gadgets are connected to the network wirelessly. Efficiently encoded videos stream smoothly, but DVDs tend to stutter.
Now, instead of breaking through walls to get GB ethernet cables everywhere, or planting dlan plugs in all sockets, we've decided to transcode all DVDs to a format which facilitates smooth streaming. As a transcoder, we use handbrake with the default settings for a matroska (mkv) container (video encoding by x264 and audio by 160 bit aac). This encoding typically results in file sizes of a quarter to a half of the original while retaining the (visual and aureal) quality.
My E6600 is crunching through the DVDs as fast as it can, but my wife's i750 beats the poor thing by a factor of three! Just wait, though, just wait ... :D
Some movies, which presumably have been ripped poorly, have to processed file by file. For these instances, mkvmerge is useful, which is a part of the mkvtoolnix suite. The GUI version is truly helpful since it automatically determines sensible parameters for the merge.