Become a MacRumors Supporter for $50/year with no ads, ability to filter front page stories, and private forums.
Yes, Air Video streams over 3G. Works great on both my iPad on Wi-Fi as well as my iPhone over 3G.

I use Air Video as well, but still use Handbrake to encode everything. This way, I can watch my entire library on my Apple TV at home (without Hacking) and have files I can stream via Air Video without any need for on the fly conversion. It just works.

I agree, it works better than I could have ever imagined over 3G. I too convert mine to save space and as you mentioned, no need for on the fly.
 
Personally, I couldn't get Handbrake to work correctly. Haven't gone back and tried again, though. I went with DVD Ripper, which while it takes longer to rip a DVD than it would to actually watch the movie (!), it does a fine job of ripping, and setting the file up with iPad settings. I have been satisfied with DVD Ripper.
 
New Build.

For the new build it does not have a internal protection dycripter therefore i can not back up my dvd's to the iPad. How do you guys do it?
 
I rip a bunch of movies with DVD Shrink and then queue them all up to convert overnight or when I'm at work.
 
Register on MacRumors! This sidebar will go away, and you'll see fewer ads.