Converting and compressing mp4 video for iBook Author

I'm working on an iBook on Propaganda in WW II and would like to include loads of videos.
The Internet Archive has a great collection:
Example: "Out of the Frying Pan Into the Firing Line (1942)"
http://archive.org/details/OutOfTheFryingPanIntoTheFiringLine
Most are in mp4 format. I have tried bringing the mp4 into QT or iMovie and both seem to do about the same job of converting. Plus they increase file size by about 50%
Primary question
I'm targeting my iBook as a free resource for schools. File size is an issue for school iPads that might be 16 GB. Is there anyway to reduce file size, without losing quality? I saw some discussions about Compressor, but that seems to be designed for Final Cut Pro and I'm not a video expert.
Secondary question:
Is there any way to improve the quality of these old videos. Perhaps there are some settings I'm missing in QT or iMovie??
I'm an instructional design guy - not a video guy. Your suggestions will be greatly appreciated ... especially in laymen's terms.
Thanks

I'm keeping a "Working with IBA" collection at Scoop.it.
http://www.scoop.it/t/publishing-with-ibooks-author
I posted a link to this discussion ... and I received a comment (at Scoop.it) from Frank Lowney that's interesting. I don't have Pages, but I may get it try this out. (cheaper than Compressor!)
Frank comments:
"Strange but apparently true. I downloaded a 320x240 *.mp4 file from the Internet Archive and compressed it with the latest version of Handbrake using the iPhone/iPod touch preset. The result was 2.6 MB smaller that what I had downloaded. As predicted, iBooks Author rejected it suggesting I use QuickTime X Player. I did that using the iPod touch/iPhone 3GS preset but the result was a whopping 21.9 MB larger!
Let's remember that the sole target of what iBooks Author outputs is iBooks on the iPad, nothing else.
Next, I use Pages to create an *.epub file with the Handbrake encoded movie in it. Guess what? It plays just fine in iBooks!
So something is fishy here."

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I'm making an free iBook for students on WWII propaganda using old videos from the Internet archive.
I'd plan to use Compressor to:
1. Convert the .mp4 files to a .m4v that iBooks Author will accept. (I know I can use QT for that, but it increases file size)
2. Use Compressor to reduce file size so my iBook doesn't get too big
3. Get videos that look & sound the best, given the poor quality of the original source videos.
Here's some sample videos that I'll use:
http://www.archive.org/download/OutOfTheFryingPanIntoTheFiringLine/OutOfTheFryin gPanIntoTheFiringLine.mp
http://archive.org/download/AvengeDe1942/AvengeDe1942_edit.mp4
PS - I will also be editing some of the original videos in iMovie - if I use different settings to prep those videos for iBook Author, let me know.
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http://www.box.com/s/fr6erqe4yt05fyojyzi2
http://www.box.com/s/eh0bk13h33uidfayhunx
http://www.box.com/s/qx2bjeytgr9a260rprp6
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Converting and compressing mp4 video for iBook Author

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