For Bluray you have a couple choices. Option 1, Lossless:
1) Decrypt the Disc to your drive.
2) Extract the RAW Video Audio Streams (For this I use MeGUIs HDStream Extractor)
3) then use the MKV Muxer to remux the Video/Audio into a MKV conatiner.
If you do not care about file size, this will be a 100% 1:1 lossless copy.
You can even recode the audio to something like the Core AC3 640, or even 448 if you so choose and keep the video untouched. Option 2, Recode:
I prefer the H264 codec for video and AC3 for Audio. You can also use DTS if you wish.
Again, I think MeGUI is the best tool for this job. Its excellent for HD video.
If you recode, the choice between MP4 and MKV is really a personal prefernce. But keep in mind a couple things.
1. MP4 container can not exceed 4GB in size (try to keep it at 3.99 or lower)
2. MP4 + AC3 may not playback audio in all players. Sharks Codec back will resolve this issue. (If your using MeGUI youll have his codecs anyway
3. There is no limit to file size with MKV.
I usually downsize alot of HD videos to 1280x720, using a bit rate of at least 5000-5400.
I also use AC3 audio at 448 or 640kbps.
If the total is less than 4GB I use a MP4 conatiner, if over 4GB, MKV.
Also, I would highly recommend sticking with HD resolutions. 1280x720 or 1920x1080.
Cropping balck bars and resizing to anything other, defeats the entire purpose as it is no longer a true HD resolution.
I know many may disagree, but as far as DVD FAB, Ive tried and didn't like it all.
The quality was really bad, IMHO.
I made a brief tutorial of using MeGUI if you want to give it a try & are unfamiliar with it.