You’ll probably get more detailed and correct info here:
http://originaltrilogy.com/discussion/How-Tos-and-Technical-Discussions/id/12
But the basics are: TSMuxerGUI can create a BD-compliant file structure from an MKV, and ImgBurn can make a BD-compliant disc from a file structure. How much more complexity you want to add on top of that is up to you. TSMuxerGUI creates an auto-playing menuless BD that repeats when done. I like that (except the repeating part, which is fixable), but if you like menus then you have a lot more work ahead of you.
As for disc art, my only suggestion is for God’s sake do not use those printable adhesive labels. Use real printable discs or a sharpie. Those adhesive labels can lose their adhesion in a warm environment (such as inside a piece of electronics), and then gum up the inside of said electronics. Not super likely, but way more likely than having the man come down on your for downloading a fan edit 😉
What about case art? This sounds more complicated than I thought. Maybe I should just skip the menu.
I think skipping the menu saves a lot of work, and you don’t honestly lose that much in the process. Again, this is better suited to the technical HOWTO section, but case art can be tricky because much of the default image printing programs (the Windows image viewer) don’t pay any attention to the size the image is supposed to be, and size is really important for case art. There should be free software out there to do it, or Photoshop if you happen to have that lying around 😉