Using mpeg2 in iMovie

I'm trying to convert alot of old format (video8, etc) home movies to dvd. I can capture the videos with my Hauppauge card (windows box) to mpeg2 video. Then I've been transferring them to my mac and using the great little program Mpeg Streamclip. My question for all of you is, should I convert these to mov or avi or should I just demux them (and if so demux to m2v, m1a, aiff, etc). My goal is just to be able to edit in iMovie and then create an iDVD. I've done a few already by converting to mov files and then editing. That worked well, but I read about demuxing and I'm not sure of the best way to do this. Thanks for any help!
-Dan

None of the Apple editors use MPEG-2 as input including Final Cut because MPEG-2 is a delivery format and not an editing one, there are not even actual frames each 30th of a second, they are rendered from other (key) frames.
However, while I hate to say it, many Windows programs such as Pinnacle Studio 7 (supposedly the least crashy version as they are on 9 now) and Ulead Video Studio. I used to use both with XP and they are really unstable with other than DV, and not all that great programs with DV either.
All that aside one of my newer acquisitions is a JVC hard drive based MPEG-2 recorder and the DV output from MPEG Streamclip was not all that bad, but I do try to stick to MPEG-2 and trim and cut and make DVD's straight from the MPEG-2 files in Streamclip then Toast if I can. They look very good.
I shoot at the best setting on it as well, 10.5 mb/sec CBR vs. the alternatives that go as low as 1.5. Since at the best setting it stores 7 hours of MPEG-2 capacity is not a huge issue anyway (it stores 37 hours at the lowest setting).
Toast 7 finally has a few themes in it for DVD, nothing like iDVD but better than before which was none.
Since you are stuck using real time capture have you thought of using a DV camera to transcode into DV since there are some decent low priced ones and at least when you are done you have a perfectly good usable DV camera. As opposed to a analog to DV device.

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