Export Media from DV Pal to AVI: Best recommended setting for Output file?

I have a project in CS4, on Windows, in DV format (original videos were M2t).
What is the optimal setting for export (and possibly for the sequence settings too) for the best quality and then smallest size?
If my input is M2T files - is the best settings to work in Premiere is DV 1 for Pal?
I always use Progressive Interlace - is that required or is the default of Lower field OK as well (I am not sure exactly what is the impact of using just one field, but from previous versions of Premiere Progressive always improved the video image)?
Is the frame rate of Pal as 25 FPS must be adhered in the sequence setting and export to avoid re-rendering?
As for the Export side:
Is using the DV Pal is best for quality without going uncompressed?
Is starting with 16GB of DV as m2T and ending with 20GB of DV reasonable?
Is the method of exporting to DV and then compressing it using a 3rd party is the best way going about the creation of the movie and then compressing it for distribution?
What is the the recommended tool for compressing - and with which format?
The end result is meant to be consumed as an AVI on people's desktop. Not on mobiles or YouTube or DVD.
On BitTorrent I see many files that are in HD but have an amazingly small size of less 1 GB - what do these guys use to achieve such small sizes yet amazing quality?
What is the best tool and codec to achieve a compression based on a file size?
Is DivX better than XVid? And is "Multipass nth pass" is the way to configure the DivX for best results?
I really feel we lack any guidance on these aspects and a huge of time is wasted every time I get to this stage when it should all be pretty standrad for me.
I know I am asking a number of question but if someone is able to jot down the basics of the tool, codec and settings to achieve best quality (regardless of the time it takes to get to it) - I'd be very grateful!
Merry Xmas and a Happy New year to all,
Eroka00

I find your post somewhat confusing.
These m2t are they converted?
Run a file that you are using in Prmeiere through Media Info and post a screendump.
http://mediainfo.sourceforge.net/nl
What is the endproduct going to be? YouTube, DVD, media player or .....

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