You have to rip the DVD before you can have handbrake convert it. I use dvddecrypter along with dvd43. Once it's ripped to a TS file then handbrake can convert it.
Is there a way to store the movie (files) on the laptop without having them on your laptop?
True 720p resolution is 1280x720. iPad can't achieve that. It can process the video at that resolution, but to display it on the native screen it will be downscaled. Downscaling = wasted bandwidth.