Chewtobacca said:

The raw capture ends up being around 24gb when compressed to lagarith. The x264 or mpeg2 encode ends up being around 21-22 gb so it's basically like having a raw capture of the laserdisc that can be popped into the blu-ray player.

I understand that you want to preserve quality, but the numbers are confusing you a bit, I think. Just because the lossless AVI is 24GB doesn't mean that you need a similar size after encoding to a delivery format to have something that looks like a raw capture on the disc. After your current encoding is finished, try using a CRF of 16 (which is absolutely sufficient to make something look like the source) and let us know the file-size. I bet it will be something like 3GB.

I won't be resizing or cropping if at all possible.

Wait, so you're leaving it 4:3? I'd strongly advise you to make it 16:9 anamorphic. It won't really hurt the picture, and it will be far nicer for people to play it back without zooming in.

I have to agree with this, and with such a small resize it should still leave most of the scaling work to the TV.

If you do decide to keep it letterboxed, it would be worth cropping off the black bars in reinserting them as solid black for compression reasons. Solid black doesn't need much of a bitrate compared to letterbox bars from the laserdisc which are covered in analogue noise.

EDIT: In fact its wise to do this even if you are making it anamorphic!