You will need to experiment and find out what works/looks best for you.
RIP the discs as you’ve been doing, then use AutoGK to convert to divx/xvid. Adjust the final output size until your reach a point where you are happy. Start at 1gb and increase the output size by 200mb or so until you find a point where it looks decent.
Or, if the WD box can read ISO’s, then use DVDShrink on your RIPS (set for DVD9), but extract the movie ONLY (and a single soundtrack). That should remove a decent amount of data from your current ISO’s.