[shilala]

None of my streaming stuff supports mkv, but it does transcode well.
MakeMKV's website is down, but their shareware is still available at softpedia and cnet.
Makemkv is great for making large files and lossless audio.
The only problem is that if there are a lot of people on your server using your files, it'll load the network and cause streaming problems. Space is also an issue.
I don't notice any difference between a 2gb mp4 and bigger files when I watch them, short of a full-blown bluray.

I looked into handbrake a bit further and there's a .dll available out there that takes care of copy protection.
From what I've read, folks generally use Makemkv to rip video, then use Handbrake to transcode. The two programs are made to work together, which is great.
DVDfab rips and re-encodes on the fly, and it's one-button simple. If I didn't already have it I'd go with Makemkv and handbrake.