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Even getting an extra long hdmi cable is a fairly cost effective solution. Nabbed a 10 meter cable for $20 myself and have the computer in the adjacent room do all the messy work and use my phone as a remote (MPC Ctrl on 'droid).
Ditto on handbrake though for hardcoding. The Normal and High Profile presets under Regular should do the trick. Just be sure to remove chapter markers unless you want chapter titles burned in at the bottom of your videos.
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