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I've read that the new H.265 video encoding algorithm can encode the same video with same quality in about 2 times smaller bitrate. Obviously I'd like to encode all my videos with this algorithm to get more free HDD space. Is this possible already with free tools available for Linux?

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There is some work done, with some success, according this project page: http://code.google.com/p/x265/ . Have in mind, that standard was officially released just in January, so you will have to wait for good working tools to come (for example while standard allows that degree of compression it doesn't mean that early codecs will support it or will be good at saving comparable quality at half bitrate). For now if anyone would really need to reduce bitrate, would have to rely on other codecs and methods.

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