here's some interesting info i picked-up from someplace a few months ago:
Transcoders, like, for eg., Dvd2One, DvDShrink and CloneDvD are so-called "compressed domain transcoders". This means they do not decode, strip down, and re-encode the data; they simply discard then rehash IDCT data - something which can reduce size but can also produce horrifying artifacts.
CCE is an ENCODER. The process here is that the data is decoded, the bit rate and/or size reduced then re-encoded. This cpu-intensive process takes longer, but produces SUBSTANTIALLY better results with no artifacting even at compression as high as 50%. Sure, there's a reduction in quality, but not horrible artifacts