Some info about DVB encoding.
This guy has a really good page about dvb encoding.
Hacked his script a little and came up with this:
mencoder 1536_20070207153000.mpg -o /tmp/test.avi -ovc xvid -xvidencopts bitrate=-420000:par=pal169 -oac mp3lame -lameopts cbr:br=128 -audio-delay -0.3 -vf pp=fd -af volnorm=1:1.10 -mc 0 -noskip -of avi -vf scale=384:-10
It scales it down to 384 wide to make it encode quick and take up less space, probably should look at lowering the bitrate as well.