These make a divx-encoded avi file that plays on a PS3, but I’m still working on the AppleTV:
Working steps to make PS3 playable AVI:
mplayer -ass -ao pcm -vo yuv4mpeg toradora01.mkv
mencoder -of avi -oac mp3lame -lameopts vbr=0:br=256 -ovc xvid -xvidencopts pass=1:cartoon -o /dev/null -audiofile audiodump.wav stream.yuv
mencoder -of avi -oac mp3lame -lameopts vbr=0:br=256 -ovc xvid -xvidencopts pass=2:bitrate=2500 -o toradora01.avi -audiofile audiodump.wav stream.yuv