If you sit down and watch each and every still frame of your movie, spending several seconds analyzing each one, you'll sure see a lot of difference - the compression algorithm isn't magically ~7x better (oh, and the size is going to be larger for 1080p, I'm used to 720p ).Flac, eh? If you do that, I'm surprised you don't go lossless on the video also. But you justify it well. Heck, i don't even do flac yet. My collection is still mostly mp3. But I do intend to one day explore the whole audiophile experiment with the expensive headphones and headphone amps, etc. just to see if there's something to it. I'll be pissed if I need to redo everything in FLAC.
Thing is, when you watch a movie, you aren't spending several seconds per frame - iirc BluRay runs at ~24fps. So yes, while you do lose some information, you're unlikely to notice it while the movie is running. I'm the kind of guy that rips my music collection to FLAC instead of lossy formats, but for the most part I'm perfectly happy watching movies in 720p x264 rips. For my viewing distance and TV (a 1080p 32" Sony), the result is very nice
My plans for my HTPC is to have a HUGE projector, like 10' wide. So that's why I figured I'd just go lossless on the video. And makemkv makes it so easy to convert. I'm going to stick with that for now. Hard drives are so cheap anyway.
That i because your brain/ears notice the smallest "hiccup" in listening to music. Your eyes perceive quality loss with video, but you hardly see it happening on the screen, depending on the screen/resolution you are using to watch the compressed video.
To put it (very!) simply, ears have a higher "resolution" than your eyes.