an .M2V file *IS* the DVD-compliant standard MPEG video stream. the files with extensions .MPG generally are called "program streams" which means it has the audio and video muxed together (and usually it means the audio will be in MPEG compression as well - BAD idea!).

quick question, was the source audio for the DVD originally recorded at 24-bit? if not (i.e. if it was recorded at 16-bit, then you upsampled it to 24-bit), then there really is no difference in the quality... upsampling will not make an audio source sound better, because those extra bits weren't there to begin with. i say this just to point out that if the source audio is 16-bit, stick with it. no use in making the audio a larger file size for no increase in quality.