Hmm. Here's a "non-engineers reply" to start the thread.. % User is the number referencing your application execution. % System is the number referencing Mac O/S activities like memory/disk swaping. % Idle is self evident.
Performance is based on CPU speed, memory usage, and disk usage. For instance, you could be burning a lot of CPU cycles on system management if an application uses up a lot of your physical memory and/or your disk is at capacity i.e. about 80%.
So when you run an application and high CPU usage rates, check your disk and memory usage. If your CPU utilization is high, and your memory utilization is about 80% you probably need more memory. There's not much you can do about CPU cycle usage.
Can't answer too much about Handbrake but is it the latest version? A older version might not be able to use the quad core or the 64bit processor therefore affecting CPU efficiency and performance.