Converting Large AVI files for iMovie

I had an old 16mm film transferred into AVI files (HD, very high quality).  The main file is too large to edit (200G), and even play on my machine.  I had them converted by the same company that did the transfer, but there is so much loss of quality, they are only good for a small digital video.  Goal is to produce this on DVD (from iMovie) for later distribution.
So my question is this--what file format should I get these AVI files converted to, so the end output is maximum quality for DVD?  IAny help and advice appreciated! 

Hi, thank you for your response!  I don't have access to a MAC right now, so will need to check later (the EHD the large files are on is formatted for MACs), but I'm sure it's uncompressed.
Even editing with a RAID, don't I eventually have to compress to fit onto a typical DVD?  So if I compressed or converted now, could I edit without a RAID?  If so, I'm just wondering what best to convert to, for maximum quality on the finished DVD product later on.

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