I really don’t see the sense in storing DVDs in anything other than their full original uncompressed format, for use with a media server.
For the price of a few dvds you can add a 500Gb drive to your server which will hold close to 100 uncompressed DVDs with all the surround sound options intact. Just strip the unwanted extras & warnings with fab, using customise mode , then stream them as needed over your home network. I have this working fine with wireless G and with the DVD source files on an extenal USB drive on the remote server.
I figure that if you compress & converting to avi, xvid. divx - whatever, then sooner or later you’ll be thinking "would this look/sound better on my big screen home theater setup if I had not compressed it ,& you’ll find yourself doing the whole project again from scratch.
Just look at the economics of say $60 for 500Gb storage vs the time you’ll spend re-ripping 100 DVDs, if you ever own that many. ( I’m in the UK & my 500Gb drive was Â£60 from amazon.co.uk )
The only value in compression , in my view, is for mobile formats, or where 95-99% compresssion means you can use an SL rather than a DL backup, if you are creatign backup DVDs for standalone players.
The better DVD software players, like powerDVD will happily open a VIDEO-TS folder anywhere on a home network. Making that happen from within the MCE interface may not be possible but who needs that really ? I bought Cyberlink remotes for 2 of my PCs and that gives me all the useful the basic DVD controls . One PC has MCE, the other is Xp Home but the remotes work with both & they work with WMP as well as with PowerDVD.
I have one slim line PC stashed behind the big TV with a wireless network interface, and the server in another part of the house. Beacsue everting is on the servier there’s no need to grope around for the DVD drive on the slim line PC, I either stream the files or copy them over via the wireless network for local storage, and use wirelss mouse/ keyboard with that PC.