Yes to author onto a DVD, you will have to convert to MPEG2, you will lose quality, hece why your file maybe 12 gig for 1 hour, but you need it around 4.3gig to go onto dvd.

The avi, is basically a non compressed raw video file, straight from camera. On adobe prem pro, you can out put after adding your effects as a mpeg file ready to import into a dvd authoring program like DVD LAB PRO. You can get results which are not far of the quality of your orginal footage, esspecially once played onto a television instead of a pc monitor.

I have basically just expanded on the advice mike gave you, and hope its of some use. happy to answer any other questions if you need any more help...