OK - I tired a few presets on the HD2. Source was a typical 1.7GB 45-45min TV episode in Widescreen (Anamorphic) PAL DVD format (720x576/50i) and I tested on the HD2 with Windows Media Player:
1) MC MPEG-4 Setting --> Output was 320x240/30, Filesize was 252MB --> played fine on HD2 but Aspect Ratio was wrong
2) Handbrake iPhone/iTouch Setting --> Output was 480x272/25, Filesize was 269MB --> played perfectly and looked very very good on the HD2
3) Handbrake Regular/Normal Setting --> Output was 704x576/25, Filesize was 594MB --> played but no video
4) Handbrake Classic Setting --> Output was 704x576/25, Filesize was 836MB --> played but aspect ratio was wrong and it stuttered
You can go on all day testing and customising bits out but i'd suggest for now:
1) Use Handbake and the iPhone setting - just works, it's quick (uses all cores), the output is small and it looks great.
2) JR needs to look at opening up the Video Transcoding settings so we can config what we want for Handhelds, DLNA etc etc. The presets have not been updated in ages and no longer work well with with the newer devices.
For those that want to play more you may want to post on the Handbrake forum (eg here is one for the Touch Pro 2
http://forum.handbrake.fr/viewtopic.php?f=7&t=15054&p=71801&hilit=HTC#p71801)
Thanks
Nathan