isnt that kind of going the wrong way..?
like going mp3 > WAV
if the AVI is an uncompressed AVI file, or a DV .AVI file, then NO, it's not like going mp3 > WAV. in these cases digital master/clone video source > DV .AVI > MPEG-2 video (DVD specification) is more like going DAT > WAV. you cannot burn an AVI file onto disc and have it watchable in a settop DVD player; unless the AVI file is a divx file (which are good quality for the compression size - WAY better than VCD or SVCD - but not as good as a high bitrate MPEG-2 video file).
now, if you take a show already on DVD (MPEG-2 video file), then edit it, and then re-encode it, that IS like going MP3 > audio CDR (WAV) > MP3. it's a BIG mistake to re-encode MPEG-2 video, because there's quality loss and MPEG-2 video is a lossy format to begin with.
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tpoff - how much loss in quality you see depends on the bitrate you select for the MPEG-2 video compression. higher bitrates (and using the VBR, a.k.a. Variable BitRate mode) are what you ideally want... e.g. max bitrate = 8000, average bitrate = 7000, min bitrate = 2000. and have WAV (a.k.a. PCM) audio. at those settings, you can easily get 60 minutes of high quality video onto 1 DVDR.
if you use a lossy audio compression (AC3 or MPEG audio - MPEG audio is the worst quality of any DVD-spec audio), then you can fit more onto a disc... as well as if you lower the video bitrate.
TMPG seems to take longer than any other MPEG-2 encoding software i've ever used on any of 3 or 4 computers. if you used Ulead DVD Workshop with the MainConcept MPEG encoder, it would definitely be quicker than TMPG. still, IMO, ProCoder or CCE will give you better quality than TMPG or MainConcept. and CCE is the fastest encoder i've ever found. i can do 4 passes with it in the time it takes MainConcept to do 2 passes, and the more passes the merrier (i've been doing 6 - 10 passes all along with DVD creation, and always had excellent results).
one other thing to keep in mind: the AVI file and the encoded MPEG file will probably not look so great on your computer monitor (it will look better on a TV set), because the majority of footage out there is interlaced which doesn't look good on computer monitors, but looks perfectly fine on TVs (which are made to show interlaced footage).