Way to go dreadlocks! I'm glad other people are working on this.
Just like you, I found mencoder shortly after I made this thread, and I've been playing around with it a lot. Here's what I've come up with so far:
mencoder movie.in -ovc xvid -xvidencopts qpel:hq_ac:vhq=2:max_bframes=2:quant_type=h263:trellis:bitrate=350 -vop expand=320:240,pp=hb/vb/dr,eq=15,scale=320:-2,hqdn3d=8:6:12 -sws 2 -ofps 15 -oac mp3lame -lameopts vbr=3:br=64:mode=3 -o movie.out
This makes a file ~2-2.5MB/min that looks really good. I played around with 2 pass encodings too, but I never really noticed a difference in the quality.
In my search I also came across
this site. I think it's run by someone on these boards. He has a script called
createogm that works well making ogm files. I think the quality is a little low though, and I don't like that it uses stereo sound (I don't see the need to use twice the space for stereo when mono sounds fine on the Z, I'd rather use that space for better video quality). You can play around with the bitrates and make it look better, but for some reason if I changed the sound to mono it got all screwed up.
At this point I realize that ffmpeg isn't worth using, mencoder is far superior. The videos it creates are smaller and higher quality (with the right settings), and the CPU usage on my Z is below 50% when I play them.
Oh yeah, I wanted to explain how to get mencoder working for those who might not know. You'll need
lame installed first if you want to use mp3 for the audio (as much as I love ogg, I've always had video/audio sync problems when I use it for videos). First you need mplayer (mencoder is included). Either get the package for your distribution on
the mplayer site (site might not be up for long, they're protesting the European software patents issue), compile it on your own (which is a pain in my opinion), or if you run Debian like me, add the sources from
http://hpisi.nerim.net/ to your sources.conf and run apt-get install mplayer w32codecs.