There really isn't any way to compress the file more than by only encoding the main movie file.
To keep room available on your card, put a movie on it only when you want to watch it. I keep them all on my comp and when I want to watch one, say at work or on the road, I transfer it to my phone and then delete it from my phone when I'm done watching it.
That's the most logical way of doing it I would think, I mean who carries around all their dvd's with them at all times? haha.