Peter, thanks.
Oh, I was looking at the wrong handbrake site before. I take it the correct one is the open source HandBrake download, which I just found at sourceforge.net.
AppleTV is $99 now, it must have gone down in price recently. AppleTV, 2TB harddrive hanging off the 1TB Time Capsule - I'll probably go with something like that after I do a little more research. The TC has only 1 USB port. With that setup I'll have to consider another way to backup the movies drive. hmmm...