Luke's right in that we don't go out of our way to support DVD backup (it's a minefield I tell ya!), but we can certainly help you out with video editing
There's not a package I know of that allows what you want to do. The main sticking point is breaking the encryption of commercial DVDs. Once you've done this, you can edit and create your DVD in just about any application (e.g Premiere Elements, Pinnacle Studio etc).
Some packages allow MPEG editing, but my workflow would be as follows:
1) Source and download DVD Decrypter or other software that allows DVD decryption (preferebaly one that allows you to rip segments of DVDs)
2) Get yourself VirtualDubMod and the Panasonic DV codec (see the FAQ for more info). Convert the bits that you want to edit from 1) above to DV AVI
3) Edit these as normal in your chosen editing software.