Why would you want to do this?
ATV2 can't output 1080p, so you're losing half the resolution at 720p. That makes a pretty big difference on a 50", not a "you wouldn't notice the difference" sort of deal.
Besides, any non-lossless encoding is lossy (bear with me

), why spend hours encoding just to reduce the quality of the material?
I know aTV 2 accepts 1080P but outputs 720P. My reason in doing so is that when (not if) Apple or another company produces a product that passes 1080P though I won't have to worry about my 720P encode being "useless".
Yes, DVD's are compressed/lossy (SD especially) thus I'm using variables such as AC3 Passthru, etc. Yet the current HB build's "Advanced Settings" such as the recent Aq and Psy-RD/Trellis do make a difference in image quality. Regardless of whether the SD or BD source/rip is compressed/lossy, not all settings are moot as they CAN slightly improve quality as they passthru or tweak the lossy material ("making something out of nothing" argument is becomes moot).
Again, encoding at 1080P is merely "future proofing," as it is only a matter of time before 1080P signals will be passed through. Either way, why risk it when I'm tossing my DVD's?
I use -1,-1 for all film material, both DVD and Blu-Ray, like I said the default values of 0,0 look (too me at least) too soft. The only time I use 0,0 is for animated material where I want it a little bit softer. As I said it's really a personal preference as to what looks good to you. For your Blu-rays I would suggest encoding a few short sample segments at both -1,-1 and 0,0 and see which you think looks better.
Deblocking is such a debated topic, it makes my head hurt

. I tried -1,-1 which produced grainy m4v's, and then the default 0,0 which was better with the same source (did them on two different SD DVD's). I'm trying 1,1 now. The default, 0,0, is almost always the best, according to the HandBrake wiki. A lot of people (apparently) prefer using negative values but to me it looks like noise.
I've read when using cqm (Lion spellcheck, I'm not using a CAM! LOL) (which I am) recomended settings should be used as the default value, and shouldn't be altered by more then +/-2. Alpha Deblocking is the most important parameter in determining the overal sharpness of your encode. Encodes with a more detailed look and don't mind the occasional block try a setting of -2:-1. A clean picture and don't mind a little bluriness try 1:2.
There are so many varying opinions, but with the Psychovisual values some are leaving Deblocking alone.