What's the best way to rip a Blu-ray disc to an Xbox 360 compatible format, while preferably maintaining surround sound and as little video encoding as possible? As far as I can tell, the 360 technically supports both AVC and VC-1 (though if at those bit rates is questionable), so I'm kind of hoping that you could do it without actually re-encoding the video at all and, instead, just processing the audio and the re-muxing everything together in a new file.
The Xbox 360 only supports MPEG2, MPEG4, H.264, or WMV. It also only supports up to 15Mbps bitrate. Blu-Ray movies are encoded at anywhere form 15Mbps to 40Mbps. That also depends on what codec the blu-ray is encoded in which could either be MPEG2, AVC, or VC-1. When you say the 360 supports AVC and VC-1 that is only when using them in a WMV file format. Any other format the Xbox supports is constrained to MPEG4/h.264. The easiest way to backup your blu-ray movies is to use something like DVDFab which will encode the movie to an HD, 360 compatible WMV. It won't look as good as the original movie but it can still be in 1080p with 5.1 surround sound.