Handbrake doesn't make disc images of DVD's does it? I have gotten a newer version recently so maybe it does now.
Handbrake recompresses the video/audio of the DVD into a video file that can be played on the iPod though. They even have (or at least had) a program separate from Handbrake called Instant Handbrake thats only function is to make iPod compatible DVD rips.
Handbrake normally lets you choose the parameters of your rip whereas the "for video iPod" version has very few options.