DVDFab is fine for decrypting/ripping, not so good for encoding.
The most important thing about Handbrake is that it uses the x264 encoder. Ripbot and BDRebuilder are two more that use it. Personally, I use BDRebuilder for backup to BD25, and Ripbot for encoding MKVs.
Here's one way to approach this:
Insert original BD, run AnyDVDHD in the background and open Ripbot. Navigate to the STREAM folder on the BD and click on any m2ts file. Ripbot will automatically choose the largest titleset, and list the next largest couple titlesets, so you can select a different one if necessary. Allow Ripbot to analyze and demux the main movie to the Ripbot working folder you specified in the INI file. (BTW, you're decrypting and demuxing in one go here, skipping a separate step to rip the disc).
Ripbot will identify any forced subtitles if present. Hit properties of the video stream and select subtitles -> build in picture. If there are any you can hardcode the forced subtitles if you want. Or, for that matter, any subtitle stream.
As to encoding, you can encode to target size, or use quality-based encoding, which has many advantages. Once you settle on a quality level that's adequate for you and your display, you can use that setting and be assured you're not over-compressing or under-compressing. Movies vary greatly as to "compressibility". Clean animation can be re-encoded to a far smaller file size without apparent loss of quality, than can a grainy, noisy source.
In Ripbot, quality levels are expressed as CRF levels. 20 is a good starting point to begin testing, and should be good enough for most people. You can drop down to 19, 18, etc. if you need higher quality. File size will be unpredictable, but you still realize substantial space saving until you get down to about CRF16. You can vary the speed of the encoding process by selecting a different profile: e.g. placebo, slowest, slow, default, fast, faster, superfast, ultrafast. The faster the preset, the larger the output file for the same CRF setting. BTW, quality based encoding is one-pass rather than the usual two-pass for encoding to target size.
Choose an audio option, specify where to output the file, give it a name, and start the encode.
Lots of other ways to do this though. Good luck.