Sorry Cassie but it would appear that you're stuffed.
Unfortunately the version of Handbrake you have doesn't support this option.
Well, shoot.
Although the thought just occurred to me that I could probably use FairMount and transfer the "DVD" to my external HDD, where I could then use a current version of Handbrake from my Mac mini to rip it, then transfer that back to my iBook... (The mini doesn't have an optical drive, so it wasn't the first thing that came to my mind.