Cheaper doesn't always mean better. I'd recommend trying the software before you comment on how good the alternatives are - it's the best way to find out about a software.
As for using a transcoder versus an encoder, there are some disadvantages to using an encoder when copying a DVD movie.
First of all, a good MPEG2 encoder is much slower than a transcoder and in most cases, the results will not be better than transcoding.
If an encoder is used, it must decode the original MPEG2 into raw video, which introduces losses. A transcoder does not decode the original MPEG2 into raw video.
A transcoder does not recompute the motion vectors which in most cases are carefully calcualted by the original encoder which authored the DVD. Unless a multi-pass encoder is used, there is no guarantee that the new encoded video will be superior to transcoded video.
So, although an encoder could be used to further compress an already compressed MPEG2 video stream, the obvious advantages of using a trascoder make it the preferred choice for a fast, high quality DVD copy software.