Yes, you’re completely correct. There’s something to consider though.

CPU encoding gives the best results possible, in terms of quality and size. Decoding, unless you have a very weak CPU, isn’t necessarily the bottleneck it most transcoding applications eg plex, jellyfin, etc.

So you can do things to make the media as streamable as possible for instance encoding your media in AV1 using the mp4 container rather than mkv. If you make it web optimized aka ATOM upfront it makes playing the file much easier and less resource intensive. Now when a client that can’t use AV1 requests it your transcode can do SW decode and HW encode. Not as efficient as pure HW but IMHO it’s a worthwhile trade off for the storage space you get in return.

You can make things more efficient by disabling subtitles and/or burnin on the media server side. If you have people like myself who need subs in everything then you can burn them in while you’re encoding the media to AV1 or only using formats like UTF8 so you can pass through them as m4v/mp4 doesn’t support subs like mkv does.

That’s essentially what the optimized versions do on Plex. Only it sticks with x264 rather than AV1.

If your media is only 720p then none of this would really make a difference for you. If you’re using 1080p+ rips then this will make a SIGNIFICANT difference. It’s made such a difference that I’ve started redoing my rips in 4K.

Unless that is you got a SAN in your closet and free electricity that is…