This isn't exactly what you asked, but I have done the same thing describe (w/DVDShrink) WITHOUT menus with the following FREEWARE tools:
IFOedit
VOBedit
I spent many hours figuring out how to merge the VOB's and still have chapters, but I'm happy with the results.
IFOedit
VOBedit
I spent many hours figuring out how to merge the VOB's and still have chapters, but I'm happy with the results.