Size is largely irrelevant. Old, single layer disks are about that size, while most modern disks are 7.1-7.7GB. In theory larger size = more detail = longer time, but some are still just bad transfers. For example, I have an old Pulp Fiction dvd here, main movie is 7.19GB, but encoded on high isn't even 700MB. On the other hand, Hot Fuzz is 7.62GB, but 1.5Gb on high because it was a good transfer to begin with. Also happens to be the longest dvd transcode I've come across.
Run it again on high but leave the defaults i.e. RF20, then compare the two in encode time, file size and image quality. On a pc with the gpu decoding you probably won't see any difference at all, however tv chips from a few years ago were significantly less powerful than todays. Odds are the differences are so small you won't notice them and if you do, the size/time difference is so small you can just go with it.
Audio is the only thing you really need to fiddle with - I missed the OPs requirement.
This is subjective, but the two default audio tracks under the high profile are outlined
here with the third paragraph being the profile default. Whether you actually need the aac track is up to you (doesn't take up much space) but you'd probably want to set the lossy AC3 track to default i.e. move it to the top of the list in the audio tab. That will preserve the surround from the dvd completely and should be fine in any media server - unless apples involved
It's worth playing around and getting it right. Once you've nailed it you just add jobs to the queue and encode disks overnight/while at work.
So to reiterate. Options > reset built-in pre-sets > encode and try both audio streams. The op will be stuck with both, but ill have to decide which would be the better default. I'm guessing AC3, but I don't know how the new apple tv handles things.
Edit: It's probably best to do a bit of reading on the benefits of Dolby Pro Logic II vs. Dolby Digital (aka AC3). There's plenty info about, but the PLII is the best compromise is most cases - hence default. Most dvds carry a DPLII surround track.
but basically it's a down-mixed stereo track that can upmix to 5 channel surround (no .1, although receivers should send the lowest frequencies to the sub). Dolby Digital aka AC3 will have vastly superior channel separation and bass though.