Search is your friend. For me, however, I've stuck with the AppleTV2 or iPad settings as the difference (for me) is hard to tell yet the file size is bigger. Not worth the loss of space for the slightly better quality you may get.
I can highly recommend iVI, which uses the same encoding tools as Handbrake, but is more user friendly. I don't remember if it's free, but it certainly didn't cost much.
You can avoid using handbrake. MKV can be played off the new Ipad using the "AVPlayerHD" app. If you want to stream from a computer you can use the "Air Video" app.
Problem with playing non-QuickTime formats such as MKV is that they don't benefit from hardware (GPU) acceleration. No current app I'm aware of at this moment circumvents this limitation.
This may not be a big deal depending on how you encode the movie but just thought I'd put it out there.