ffmpeg is a command-line application, and the PHP extension is just a wrapper for the command-line application. Since ruby can execute external programs (I forget the exact code at the moment, but it may be exec?) You can find ffmpeg's command line options.. ffmpeg --help should list these options.
I'd seriously consider doing this as an "offline" process though, separate from your Rails app, since a big video could take a very long time to convert.
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