To add to the clarification, both DVD and Blu-ray content is basically always sampled as YUV 4:2:0, and basically no transcode ever changes that. Masters generally have higher chroma sampling (eg. 4:2:2) but this is reduced to 4:2:0 when the content is put on DVD/BD, not by encoders further down the chain. Masters can also have a higher bit depth (eg. 10-bit) per channel which is then converted to 8-bit for DVD/BD.
Also, multi-channel is rarely downmixed to stereo in case of HD content - for Blu-ray rips, however, only the core from Dolby TrueHD (640kbps AC3) or DTS-MA (1536kbps DTS) is generally used (at least in case of western content) instead of the full lossless audio (and in cases where lossless audio is used it is generally converted to FLAC because it compresses better).
Just because rips have drastically smaller filesizes doesn't mean that they're going to have drastically lower quality, though - Blu-ray has limitations in the amount of H.264 features that can be used, and encoding applications also matter. x264, which is a FOSS H.264 encoder, is generally recognized as the best H.264 encoder in the world. If you use x264 and go above Blu-ray limits, hell even H.264 level 4.1 limits, or even encode in 10-bit, it's not uncommon that you'll be able to shave off over 50% of the file's original size or more (compared to the original .m2ts file on the BD) with no discernible loss in video or audio quality. In case of western content, people tend to mostly stick to level 4.1 8-bit H.264, though, because of hardware compatibility. 5.1 DTS/AC3 core is used instead of say, 5.1 AAC is used for compatibility reasons as well - because S/PDIF can't do 24-bit 5.1 LPCM.
There is one scene that cares very little about hardware compatibility, though: the anime scene. You can find pretty much the most advanced video, audio and subtitle formats in use there, with 10-bit H.264 video going up to level 5.1, AAC/FLAC audio, very complex ASS subtitles, Matroska ordered chapters... it's quite fascinating, really.