Jonny has released PSPEnc for the PSP, a GUI for FFMPEG. It uses Avisynth to handle the video. The output is an MP4 file compatible with PSP (only MPEG4 SP atm). AviSynth_040905 is required for PSPEnc (included).
Avs, Avi, Mkv, Ogm, Mpg, Wmv ... input (basically everything working with DirectShowSource).
Automatic crop/addborders, to obtain correct aspect ratio. Automatic video bitrate calculation (you have to choose only audio bitrate and total output size).
1 pass, 2 pass, 1 pass with fixed quantizer, compressibility test, size prediction for fixed quantizer encodes. Job list. You can see quantizer distribution after every encode. You can run multiple istances of PSPEnc.
To encode from DVD source you should provide an avs script with progressive, cropped video and specify the correct aspect ratio (usually i do this with GKnot ^^). Compressibility test is based on the quantizer you specify (it basically tell you how near/far you are from this quant). If you obtain an output with wrong size (this is applicable mainly for 2 pass encodes), you have probably saturated video (and/or audio!).