A 4000 kbps bitrate is a waste of space, in my opinion. Get the latest version of HandBrake (0.9.3) and use the Apple TV preset. It uses Constant Quality, expressed as a percentage. The default is 59%. I bump it up to 61% and turn on the decomb filter. The result is a DVD-quality encode in a pretty small file size.
FYI, go to Presets > Update Built in Presets since you are obviously still using the 0.9.2 presets.FYI, I just tried these settings and the movie won't show up on the ATV. Also, with version 9.3, when I select the ATV preselect, it defaults to avg bit rate (2500) NOT constant Quality. So I select CQ, set to 62% and ripped with decomb on. No joy on ATV.
Back to my old presets...
FYI, go to Presets > Update Built in Presets since you are obviously still using the 0.9.2 presets.