Apple TV 2, DVD's, and external hard drives

Hello All...Here is what I am trying to accomplish:
1 Burn DVD's to external hard drive
2 Use Apple TV to play DVD's on brand new Panasonic Plasma via the external storage device.
I've got a 3 month old macbook pro running mountain lion, a Buffalo MiniStation Thunderbolt HD-PATU3 with 1TB of space, apple tv, wireless router, and a Panasonic TC-P50UT50
What I'm looking for is some direction in the best way to get the DVD's onto the hard drive and ultimately play on the TV. I read that an uncompressed DVD takes up about 7GB of space which is too much considering the hundreds of movies I have. So, what is a good software to rip the DVD's to itunes as well as compress the files without losing a lot of quality?
After the compressed files are on the external hard drive am I able to somehow play them using the Apple TV interface?
If not I suppose I could just plug the external hard drive into the side of the TV using the USB 3.0 or HDMI port, but part of the reason I bought the Apple TV was that I thought this was possible.
Thank you,
RR

Unfortunately, commercial DVDs that you have bought 99.9% of the time will be copy protected and Apple's forum terms prohibit discussion of circumventing the copy protection.  In various places circumventing digital copy protection is potentially illegal even if you own and intend to keep the DVD.  Hence Apple do not wish DVD rippers etc discussed here.
Another problem is that AppleTv cannot play back DVDs copied to an external drive as it does not understand the format.  So even if you can 'copy' your DVDs you then need to convert to h264 format to play on AppleTV.
Video formats for AppleTv are limited.  They also do not support DVD like menu structures (thogh AppleTV 1 did with itunes Extras movies).
If you have unprotected video you wish to convert eg home video on DVD, then something like Handbrake or MPEGStreamclip with Apple's MPEG2 component might do the job.  These programs are not DVD rippers but can process unprotected MPEG2 video.
AC

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