What is the best way to manage my dvd's with the Apple TV

Hi,
I might be in the wrong category/subforum, but I dont really know where to post my question exactly.
A few months ago I bought my first MBP after owning several ipods, iphones and ipads, an Apple TV and an Airport Extreme.
My wife and I have several DVD's stored on our shelf, but I want to have them in my library to make sure we won't lose the classics or damage them with a scrath. For this I am converting them to MP4 format so they will be importable into iTunes, but here is my question:
Since we have a lot of DVD's I want to convert, my hard disk wont be able to store all dvd's along with my documents and music, so I was wondering if there is an option to connect an external hard drive to my Airport Extreme, store all MP4 files on that hard disk and make a direct connection to my library so I can stream them from the hard disk to the Apple TV or MBP.
Since I'm quite new to the real iOS experiance (I'm a formerly windows user), I'm still trying to explore the features and posibilities. If anybody knows a better way to convert DVD's to a hard disk, preserve space on the MBP but have the option to stream to other devices, I am all ears

As long as it is pointed to iTunes it will be accessible via home sharing on Apple TV.
http://support.apple.com/kb/HT1751?viewlocale=en_US&locale=en_US
If these are commercial DVD's we can't comment on any conversion process.

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