I'm not sure that's a meaningful question. 720P refers to a resolution. There's 720P content that looks like crap, and 720P content that looks good.
You asked if there was a better codec than Xvid, and I answered "H.264". That was a bit of a tease, as that's the codec that Handbrake uses.
H.264 is one of the codecs used on Blu-Ray discs.
A.