Blue Rips settings recommendation

Keeping the HD audio (for when your future hardware/software can fully utilize it) is probably a waste of space unless you significantly value audio quality over video quality. I recommend either keeping both video and audio at full quality (by directly copying the streams) or reencoding the video and using a lossy audio track.

What you should do is encode a small portion of the video with some test settings. Say a 1000 frames. Then compare a few frames to the source. screenshotcomparison.com is a great site to directly compare frames. Then change your settings accordingly. I'm much more used to using MeGUI than handbrake though.

A couple tips. Movies with a decent amount of grain will need a much higher bitrate to keep the grain intact. Animated movies won't need nearly as much of a bitrate to keep quality intact compared to live action films.

I'm not too sure how tech savvy you are but you could check out eac3to for the audio. It's an easy to use program as long as you're familiar with command prompt. There are a few GUIs out there for it but I think they are buggy and don't work well. I would also highly recommend using MeGUI if you want to get the most from your encodes. It's much more of a tweakers program compared to handbrake which was made for novices and won't always give you optimal results. MeGUI will require you do a little light reading on what all the settings do and how they affect your encode. But like I said, it will give you the best results.