The "problem" is that hardcoding subs the way you want to do it means de- and remuxing streams twice. Compressing twice won't be good wrt quality. IIGC with mencoder you can select a subtitle stream with "-slang en" (english subs) when you're going to convert, that should add the subs as hardcoded in the output stream but I haven't tried that myself. If you can manage to rip subs to SRT format instead, you could do "mencoder -ovc codecname -oac codecname -sub input.srt -o output.avi input.avi". For another approach, MPEG-based instead of AVI, you could check
Encode2mpeg. To get the idea see chapter
add Chapters and Subtitles to VCD/SVCD/DVD from SPU streams, Vobsub and text subtitles. Maybe also search LQ for similar threads, though I have no idea if there's any. If there are none you could also check the Mplayer site mailing lists and docs, there's a lot of info about mencoder usage there. If *that* doesn't help there's only two fora on the 'net that excel dealing with video: Doom9 and Afterdawn. Unfortunately that *may* require you to run POS or POS tools under WINE...