Highest Video quality, While iPod Classic Compatible

I apologize if someone already posted this.

I have a couple DVD's of TV Shows that I want on my Mac. I want the highest quality (in terms of resolution) but I also want it to be compatible with my iPod (iPod 5.5G 80GB).

Now, I have used Handbrake (iPod Classic profile) in the past and this works fine, but the maximum resolution it encodes is 656x368. However, I recently bought some of the newer episodes (SD format) and those are 853x480 and they're still compatible with my iPod.

My question is, what's the secret at this point? It's not a big deal if there's isn't a solution, but still curious to how this works.