HandBrake is free and offers a much wider array of options than that app. Among them, and most importantly, is the option for the program to automatically adjust parameters to output a certain size file.
Since the TouchPad requires 2gb files, this is, IMO, the best way to hit that limit while retaining maximum quality and with minimal screwing around of the settings. No worrying about how big the source file is, just set the max file size to 1.9gb and let it convert.
Well, my understanding was there is hardware/driver support in WebOS to do hardware decoding of MP4 files, so that's what I encoded them as. Android will play MP4, so no need to re-encode but there may be a more efficient codec choice once Android is ported - I don't know much about video codecs.
I just import the file, leave it exporting the same as the source resolution, select MP4 as the output type, and select the target size at 1900mb... no other tweaks. I can export my presets but I didn't do any tweaking and I'm not sure how useful they'll be.