Well, it's good you have a power mac, because this worked, but it takes two lengthly encoding processes.
Step 1, turn your dvd or source into a standard MPEG, using Handbrake. Download Handbrake, it's free, and it works really well for encoding ipod video. Anyway, the settings in Handbrake...
Pick longest track on record
File format->MP4
Codecs-> MPEG-4 Video/AAC Audio
Average bitrate->1000
check 2 pass encoding
Keep pictrue settings to whatever they are, but scale it down and make a note at what the resolution needs to be for the psp (in next step), for example:
Harry Potter and the Prisoner of Azkiban is widescreen and defaults to 720x304, when scaled down to a width of 368 (max width of psp) the result is 368x160. I need to know what the size is for the next step.
Anyway, when all set up, go ahead and rip the MPEG-4.
Do something for about 2 hours.
Now, the next encode step occurs in ffmpegx...
Open the new file you made.
In target format use the psp setting.
In video chnage bitrate to 450.
In video parameters change the video size to the size you noted from handbrake, so for the movie I just encoded, it would be 368x160.
In audio change the audio bitrate setting to 128.
Then hit encode. Go do something for another hour.
Put the new file on your psp in 100MNV01 folder.
It works! And is free!
The resulting file was a little over 550MB, and it is a 2hr 16min movie.
Consequently, I will say that ipod video is superior to psp video. The max bitrate for the psp is 450, the ipod can handle 750, there is a visable difference. In black areas and in transistions, quick movement, the quality loss is clearly seen. Not to say it doesn't rock, because it does!