I have been in the backup my movies to viewable media files game for 3 or 4 years now with a lot of trial and error and MakeMKV is all you need for backing up and Handbrake if you want a smaller file size. I first used DVD Decrypter, then DVD Shrink which were good but I wanted to also be able to rip my Blu-Rays for digital copies for play on my Boxee Box which led me to MakeMKV, which I have been very happy with. MKV also seems to be a more stable or "liked" format by the Boxee Box than some ISOs.
Using MakeMKV, I've only had 2 out of my 50 or so Blu-Rays that it couldn't back up. It is also very fast and easy for ripping DVDs. It's also very simple to keep all of the Extras such as Behind the Scenes, Deleted Scenes etc. as separate files that you can easily pull up and watch from the Boxee Box “File” tab. The biggest benefit for me though for converting my movies to files for access on the Boxee Box is being able to save just the movie and have it start on the title frame without having to sit thought the Previews and other BS titles at the beginning of the disc. I personally also have no need for the Menus but some people do – in that case you would want a full backed up ISO. Note, you will of course need a Blu-Ray ROM Drive (an External USB is the easiest way to go) to backup your Blu-Rays but as prices have come down you should be able to get one for $80 or so.
Here's my process:
First off, in the MKV preferences, I have it skip titles shorter than 180 seconds vs. the default of 120. At 120 it was still grabbing some junk titles. At 180, it hardly ever finds anything but supplements you might want and typically if there is one at 4 - 5 minutes, it's usually only a trailer so it could probably be increased to 240 or 300 seconds. In the Preferences, I also select a default language for audio and subtitles so that it has those selected by default when it initially scans the disc. So for me I've picked English but you still can see all of the other available streams after your initial scan to pick others if you want.
Once MakeMKV has scanned the disc and presented the available Titles, since you can't tell what's what except for figuring out that the largest title usually on top is the main movie, I just go ahead and grab all the titles it suggests and then go through them afterwards to see which extras I want to keep or delete. I also always open the dropdown of the Main Movie title to pick my audio streams. Personally, I always select the English DTS tracks over Dolby Digital if they have them, skip the non-English and then if I see any other English tracks (typically in DD 2.0) I grab those as well as they are usually the commentary tracks. Also on Blu-Rays, you have the choice of grabbing the HD Digital Audio Streams (DTS-HD/ DD-MA) or the Core Streams (that are listed as dropdowns). I have an older receiver that only decodes standard 5.1 DTS and DD and not the newer 7.1 HD Streams so I only grab the cored versions, which are smaller in size and usually sound fairly similar as well but that's your choice.
Then I hit the MakeMKV button and let it go. It’s fast and can typically backup a full Blu-Ray in 20 minutes or so. Once the process is done I will go into my Destination folder and check each of my titles to see what I want to keep and delete. I also rename titles from "Title xx" to the actual title: Inception (2010).mkv (include the year and actual name per IMDB for proper identification by the Boxee Box) and I'd name an Extra file something like: Inception Extras - Behind The Scenes. Then in the Boxee Box, I access movies through the "Movies" tab and a folder for Movie Extras that I just access through the "Files" tab. I prefer not to intermingle them in Movies because the file identification process would be all screwed up - I was thinking recently though that you might be able to include Extras in Movies if you identified them as a Part II of the movie etc. and then they would be located in the launch menu of the movie but not show up with all of your movie images. Still need to try this though.
Once I have my newly backed up files from MakeMKV, I do keep a master, full resolution 1080p copy on my backup storage drive but since for now I access everything from my B Box on an older 720p HD Display, I also Handbrake (http://handbrake.fr/) my backups to reduce the storage size on my main watching External USB HD drive but with no noticeable difference (to my eye) from the original. I take my Blu-Ray rips down to 720p (I just use the “Normal” Handbrake Preset, save in the MKV container and in the Picture tab bring resolution down to 1280 x ...). For DVDs, I also rip using the “Normal” preset and to same full resolution of the original DVD of 720 x ..... I just go with the Handbrake encoder preset quality default of 20RF for both and again personally, cannot tell a difference between the original. It usually reduces the file size by 70 - 80% (Example - 25GB full Blu-Ray movie down to 5GB & 5GB DVD down to 1GB). I also make sure on the Handbrake Audio dropdown that I have my Audio Tracks checked appropriately just like what you grabbed on the original rip - main audio then commentaries etc. Again I recommend you choose the MKV container for your output on Handbrake as this is the only way to passthrough Blu-Rays/DVDs with DTS audio tracks. MP4s will not pass through the DTS track.
I will also at times depending on the movie, Handbrake another even smaller version using the iPhone or iPod preset for playing back on the Phone or for kids watching shows in the car on trips, etc. If you are playing back on an iPhone or Apple TV 2 and don't care about the size of the file, you should just be able to take your newly converted 720p MKV, make a copy and change the file extension from .mkv to .mp4 or .m4v and have it play back fine on those devices since your converted file has been encoded as H.264 and both the iPhone4 and Apple TV support a 1280 x ... resolution. If your main audio track is DTS passthrough, you’ll need to re-convert using AAC audio.
My last step is creating local movie cover images for all my movies using this process: http://forums.boxee.tv/showthread.php?t=31299
Then I copy my .TBN image and MKV Movie file to my B Box "Movies" folder, have the B Box rescan the folder and there it is - the Cover image looks great, the movie looks and sounds just like the original at 1/5th the size, it starts on the first frame with no previews and other junk and I can click on the Audio Setting in each movie to access my commentary or other audio streams and/or subtitles as well. If you follow this process I think you’ll be pleased with the end result.