Encoding using Mencoder

Hi,

I have the vob files of a dvd in a directory. I happened to found the
following command and it seems to work.

cat *.vob | mencoder -oac mp3lame -lameopts cbr:br=128:vol=4 -aid 128 -ovc
xvid -sws 2 -xvidencopts bitrate=600:max_key_interval=240:4mv:pass=1 -ofps
25 -vop scale=640:360 -o title2.avi -

But the problem is, the size of the output file is about 2.3 GB. Is there
a way so that I can encode it into a 700MB file to burn it on a single CD.

Hope I'll get some help.
Santhosh