A couple of observations:
Yes, shrinking a 3 hour movie like the Godfather will result in substantial video quality reduction in order to fit into a DVD-5 spec.
You mentioned CDs though I assume you meant DVDs -- although with CDs, if you know what you are doing, you could rip the films as DIVX or AVIs for playback as either SVCDs or XVID files you could watch on your computer or output to your TV.
Of course you could also get yourself a dual-layer DVD burner (they are fairly cheap these days) and easily get each film on a dual-layered DVD.
Personally, as a DVD lover and an owner of said Godfather boxed set, I think you are being silly by not just playing the movies that you actually spent money on! This isn't the Mona Lisa and nobody is going to make you a millionaire because you have a sealed copy of this very easy to obtain box set. Open it up, enjoy the movies and all the extras. Don't eat dinner on it. Treat it nicely and it will stay in excellent shape. To try to jump through hoops just to get a good looking version of DVDs that you already own is just goofy (no offense). Heck, if you must keep your box pristine, go on ebay and just find a cheap used copy rather than pulling your hair out over something so pointless.
Now go enjoy the movies -- two of them are about as good as cinema gets (you guess which two)!