That's true, but the OP said "Typical DVD-quality SD bitrate". DVDs use MPEG-2 encoding, but there are much better codecs available today, such as H.264, which can achieve equivalent quality at substantially lower bitrates.

Opinions vary on what the "best" bitrate for transcoding DVDs to H.264 is, and it depends on what your content is too. In a quick search I found people claiming as low as 500kbps(+128kpbs for audio)[1], which is half what the OP uses, all the way up to 2500kbps[2], double his figure. All of which leads me to believe that 1.25Mbps is a pretty reasonable napkin number.

[1]http://forums.macrumors.com/showthread.php?t=842536

[2]http://www.networkedmediatank.com/showthread.php?tid=6867