MPEG encoding is really nothing more than advanced math.
- Encoders analyze video streams and then create fancy mathematical equations based on the source, creating a new video stream.
- Transcoders essentially re-calculate the equations, taking shortcuts or arbitrarily lowering certain values. Streams are not analyzed. You can basically only have a successfrul transcode on material that is clean and was exaggerated to being with (bitrate too high, for example).
Studio source is clean, and generally it's encoding bitrates/properties were exaggerated and over the top. Studios want to be 110% sure that the movies looks good. They usually do the same for tv shows, although some of the more recent sets seem to be lacking (Thundercats, Pokemon).
Homemade source is not clean. A transcode is not suggested on homemade material.
If your homemade source is too large, I suggest you re-encode it with Canopus Procoder before authoring a DVD. For already-authored DVDs, you can also use DVD Rebuilder with Canopus Procoder 2 as the encoder engine. It will decompile the DVD, re-encode the video, and then recompile the DVD.
I notice loss with my eyes. The computer (especially LCD monitors) are good for seeing noise, if you want to look for it. But I watch most of my stuff on normal tv screens between 20 and 35 inches.
There is a paper by HP on the topic online: