Encoding MPEG-2 data is a task that you should be looking at using the lowest bit-rate that is acceptable for the application.
It's kinda like putting premium gasoline in a car that runs well on regular. Not much use.
The trick is that the lower the bit rate the smaller the file size of the compression. Also, consider that the term encode means that the content must be decoded on playback. That function is dependent on the power of the playback device. Set Top DVD players usually are not as capable as a computer.
Encoding video used to be a Black Art with those who really understood the whole process. Practically, it is not that hard when you learn the tricks. Encoding used to be done in hardware, but tools like Compressor make it possible in software. There are lots of encoding tools available. Many choose the best, in their opinion and stick with it.