digital_darknes you should be asking on forum dedicated to movie music. you most likely won't find your answer here.
Nix yes it is the compression, mpeg4 is very effiecient. dvd movies are mpeg2. i heard they are going to make mpeg4 home dvd players when the the mpeg4 standard is completed.
many developers have released beta (pre-final) mpeg4 codecs like xVID. when i compared xvid to Divx the quality was about the same. did you know they used to sell home Divx players, it was the hottest craze, which died quickly.
i can definately notice a difference from a 1GB xVID rip and the full DVD rip. but for sharing on the internet , mpeg4 will dominate. most people do not want to download full 8GB movies. me personally i would rather rent a movie and just rip it using dvddecrypter and edit out parts i don't want with dvd shrink.