OK. I have played a lot with subtitles lately, and here is how I do it.
First, I should say, I have a PC running side by side with my mac. I use the PC and anydvd to rip the whole bluray to the PC. (of course, you could use bootcamp, or another virtual machine program to run anydvd on a mac)
Once it is on the hard drive I use Clown BD, and it can find the movie file on a bluray, extract the forced subtitles, and convert a DTS track to an AC3 Track. It produces a .TS file of the movie, with a ac3 soundtrack, and it will also leave you a chapters.txt, and a subtitle.sup. I dont bother with subtitles, unless there are forced ones, like avatar, 2012, or defiance....
You can handbrake the .ts file, I usually use the apple tv preset, and just change the picture settings size to 1280 X ???? (I check the "keep aspect ratio" button, so the height is dependant on the aspect ratio of the movie)
I also change the on the video tab, i make it avg bitrate, 3500 (maybe too low for some people.. but i found it a happy medium between quality, and making the apple tv not get super choppy at the start)
While that is running, you can use another program suprip to look at the subtitles, and convert them to an SRT file. The only problem i have found with this program is the OCR.. its not very good, it never recognizes an ' and it cant tell a capital I from a lower case L.. But regardless. It works OK. I then take the output from there.. and bring it to my mac. I have found its actually faster to fix the subtitles in the text editor. Make sure you save it as a Unicode UTF8 File. You can double check your work in jubler then.. Usually if there is an issue in jubler, it will appear as a pink highlighted line.. (usually just a line that is too long, you can insert an enter/second line and all is well. )
From there.. you can tag your finished M4V file, (windows side.. MetaX by Dan Hensley.. or Subler on mac) In either case, I open the file in subler, and add the subtitle .SRT file, and now you can add the chapters.TXT file too. Save it, and then import to Itunes. From there, just resync you appletv, and CRITICAL.. Make sure you turn on subtitles on the apple TV.. I forgot about that.. and was pulling my hair out.
Thats about it. Its a little bit of a pain, but once you make a work flow.. its not really a big deal. Im just happy i found clown BD to make eac3to more of a GUI program, rather than command line. and it converts the predominant DTS files on blurays to an Atv friendly AC3..
Hope that helps!