Handbrake no longer decrypts encrypted DVDs, at least in OSX anyway.
I've been using ripit recently and that's been working well. I've also used MacTheRipper or in extreme cases DVDFAB in a windows VM and then handbrake.
I pick the AppleTV option and away I go, never a problem and I don't have to fiddle with settings.
Oh, and +1 for AirVideo.