Here is a python script to convert an .iso of a DVD to avi and to encode it using mpeg4. It is a slightly modified version of the script found at to work with newer versions of mplayer/mencoder.

Later edit:
It seems that mplayer/mencoder know to play/convert .iso files directly so we can do:
mencoder in.iso -o /dev/null -ovc xvid -xvidencopts pass=1:bitrate=800:threads=2 -oac copy
mencoder in.iso -o out.mpeg -ovc xvid -xvidencopts pass=2:bitrate=800:threads=2 -oac copy