Just for the record, I completed copying the 2hr video using the 2 step process I described earlier using configuration 4. (i.e. w/the intermediary DV tape) and even during extended capturing (~80 minutes) there were zero frames lost.

I'm guessing but there could be a buffering issue in the camcorder chip which cannot handle extended direct conversions without losing frames. The direct conversion (i.e. w/no DV tape) feature may be there just for conversions of shorter duration, and not really intended for what I tried to use it for. Probably all MiniDV camcorders will have this issue.