Why reencode? Because it's trendy to use H.264 and/or MKV? You need space? There are plenty of camcorders, cellphones and photocameras that can film directly in H.264, saving you not only space but also the time to convert.
You can "reauthor" the DVD using TDA any version, almost transparent for the quality, then burn the result on a DVD. People not knowing how to properly use software would obtain better results if they let the player/TV do the deinterlacing for them (as you told us, since the LCDs are non-interlaced).