I don't know about how AME reports its estimates, and I have not tested iso size, but here is the info I did the last time I tried to understand Encore and disk sizes. It was done for DVD, but I believe the same issues are present for Bluray + the issue of whether Encore was "padding" its predictions.
FYI, my belief is that an iso that fills a disk when the image is burned, is too large to copy to that disk. So you can't assume the size of the iso file is the same as the final DVD/Bluray content.
Basically, Encore says it is tracking GB in the BUILD panel, but it is really tracking bytes. A DVD that is called "4.7 Gigabytes" is really only 4.38GB - it is 4,706,074,624 bytes. To get to Gigabytes, you divide by 1,073,741,824 (1.024 * 1024 * 1024). Which is about 4.38.
What this means is that if you read your file size as 3.9GB, it is actually 4,187,593,113 bytes. To make this confusing within Encore, Encore reports your file in the project panel as 3.9GB. But when it lists the amount of the disk used and free in the build panel, it is reporting bytes with "GB" after it.
I just did a no menu test with a 1.69GB m2v and 41.5MB ac3. Encore reports 526KB of ROM used (the size of empty rom), used as 1.91GB, and 2.79GB free on a 4.7GB disk. (Remember that these are all bytes.) Built to a folder, Encore reports that it is writing 1.89 GB (really bytes), and the actual output folder size is 1,891,278,848.
My recollection now is that it may have been only bluray that was the subject of comments about Encore padding its predictions of size on disk. What we are seeing here (for DVD) is no padding.