Not to resurrect a dead thread, but about how long did it take using the methods above? I went Iphone + Ipod touch preset, then changed resolution to 720x480 and that's prett much it. For a 2 hour movie, it's telling me it's gonna take about 3.5 hours to encode. I've used handbrake a ton for my ipod touch, but mostly for tv shows, and it's been about 1to1 ratio for encoding, e.g. a 60 minute episode takes a little less than 60 minutes to encode, so this seems excessive.
That would depend on how fast your computer's processor is.