DVDs are MPEG2. You can save a ton of space for the feature transcoding to MPEG4 - a 2 hour movie will easily fit into 700MB-1.5GB with very decent quality.

However, using DVDShrink, you can reduce the size of the resulting MPEG2 without transcoding - it does a very good job. Not down to 1GB, but you can easily shave a 6GB movie to 4GB or so.

A big issue using Handbrake (which I also quite like) is that it has no batch capabilities - yes, you can queue, but you have to add items one at a time to the queue.

As far as big storage goes... NAS RAID enclosure.