Some people use xvid to encode the main movie and get it down to about 700mb. However, the quality does suffer. It is still watchable though, if the encoder knows what they are doing.
If it were me, I would just rip the main feature to an .iso without any re-encode. You have to consider if your time is worth the $540 it would cost to store your collection without encoding or pairing down, vs. the $180 with maximum compression. That is a $360 dollar difference that would cost you endless hours to encode 1500 movies properly.
You could find a sale on external 1TB drives for about the same price as the internal ones. Or, buy a different case for your pc. Most cases will hold 4 hard drives or more.
The above are hard drive prices, but you could do it for less with two burners (one read, one write) and spools of dvd+r's.
That last method is only of benefit to a pirate, however, as there is no benefit versus just leaving the discs as purchased. (Edit, well OK, people that have kids or careless spouses might want beater copies.)