extreme dvd compression :)

hey im going to get a lyra a/v thing... id like to compress a dvd 2 say....... 1 gig or less... it supports mpeg-1 and mpeg-4, (sorry, i dont know the difference) how would i do this?? how small could i get it without distorting the pic on the "3.5-in. color TFT LCD screen"

spex- http://www.overstock.com/cgi-bin/d2...p=F&siteID=igtdb5gK428-4UcnU.ZdZy35CmXf..upgw