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I encoded a few movies for my SE K800i (320x200) this summer. (I have an 1GB M2). It was really cool, but the screen isn't very big, so I think I prefer watching movies on my MacBook when I travel.
Indeed, the K800i, liky my Linux ROKR E2, only have a 2.0" screen, which is really small. However, any thing beyond 2.2" is pretty comfortable.
BTW, exactly because your screen is too small, you might want to re-encode your movies to 176x144 instead at 192 kbps. You won't see any difference in quality, as the pixel size is really small -- and it will save you space.
Yes, I hade Shrek 2 in a lower resolution and it's ok quality, a total of about 40MB. But I like the crisp with full resolution :o)
Die Hard 2 took about 350MB. But I used Super to create 3GP movies, maybe I should try MPEG4. These days I play with my new Mac, so maybe later. I haven't had a Mac since I was 11 years old...