viDrop is the best choice. Try these settings:
resolution 224x176
framerate 20 (for pal-videos) or 24 (ntsc)
videobitrate: 200 (up to 350)
audio: mp2, 128kbps, 2 channels, stereo, 44khz
and as an extra MEncoder parameter:
-vf-add scale=224:176 -vf-add expand=224:176:-1:-1:1
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