Just tried ripping the Wedding Singer in an avi (h264, aac) and honestly, I don't think it will be worth it doing it this way. I think I'd rather just do a straight rip of the main movie in VIDEO_TS folders and let Vista Media Center pick it up that way. Yeah, it will be a waste of space in a sense, but I want to have a good, clean looking UI in VMC; want it to be easy to use for the wifey and guest. For example, I want to be able to use the MyMovies plugin or the DVD Library section in VMC, be able to look at movie posters and decide on which movie to select.
As for the music, I was pretty sure that I couldn't "enhance" it anymore so I'll just leave it as is. I'll try and export all of it to MP3s for my HTPC since VMC won't play M4P formatted songs. Thanks for all the info guys! I'll keep you up to date on this build. The parts should be here Wednesday, but it will be another month before I can buy a case and hard drive.