I know whereof you speak. I have lately been converting many of my favorite Tivo & store-bought DVDs to Xvid, for HDD storage and streaming to a Pinnacle ShowCenter, and despite that they are further compressed by 10x or so, they still look great, and least on a conventional TV.
I haven't gotten on the "bit torrent" highway yet, no doubt my download-limited Satellite internet service couldn't deal with it. But with the recent retirement of "NYPD Blue" we are down to watching only a couple shows a week on tv anyway...
Philips Standalone v3.01 w/2-80G drives and Tivonet.