Using Handbrake I am leaning towards these conclusions
The most influential parameter is the bit rate in the video tab.
I have run the same input files through at 300 500 800 kbps and produced output files of 360mb 514mb 746mb respectively. The input file size seems to have little or no effect on the output file size using the same settings. Been using 2 AVI files of 716mb and 1.2gb original sizes and they both produce the ~sizes above.
setting the resolution to 848 (which as fabo says is the result even if you enter 854), for some reason produces a slightly smaller file than if you have set at 640 (744 and 746). If you want to fill your droid screen without a player that has zoom (act1 video player does, see my post above), use the 848 width setting.
the 500 bit rate looks great but sound sync seems a hair off (when peoples lips are moving), but the 800 seems to SYNC better (the issue that got obsessed with this), at least on the 2 films I have been testing with.
I am not sure why am losing so much sleep trying to figure this out, I will probably rarely ever actually watch a movie on it. It is fun to blow people away with the quality though.
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