I've used most of the applications that are available for creating .wmv and .avi files for PPCs, and I've determined that FairUse is the best for me...no-nonsense, simple 1 step operation. Some methods may be faster, but the end encoding just doesn't seem to be as good.
Do these other methods work? YES. Are there problems with every method...probably. With the DVDShrink/PocketDivXEncoder method, I wasn't overly pleased with the quality of rips, even in the 250 MB range. I also experienced "out of phase" situations where mouths didn't match the audio. The longer the originally ripped movie, the worse that problem was.
FairUse has fixed those problems...for free. Sure it's not the fastest...but give it a try. I like encoding at 80kps audio and 250MB movie files, and letting it go in "full auto mode." However, I don't mind "bars" on the top and bottom of a widescreen movie.
FairUse can be found here (LE version):
http://www.fairusewizard.com/lang_en/index.html