If you're encoding to iPad then there's no need to resize the video, which is what iPod High-Rez and the other setting will do (make them smaller). For best video results keep the output the same size as the original (ALL DVD's will be playable at full rez on the iPad after encoding).
For an easy way to do it, which is what I do: Select your DVD track, select "Regular - Normal" under the settings tray and then under Picture Settings turn on Deinterlace in the filters menu. This will give you a quick one-pass encoding at full rez w/o the (aliasing) horizontal lines in the video. Your 2 hour video should be around ~1.2GB.
Cheers.