The main problem with editting MPGs is the block edges. MPG compression (warning - gross oversimplification here) divides each frame into small blocks of pixels then calculates how to best compress each block while preserving quality (keeping the viewer from noticing) and achieving the desired bit rate. This results in the block edges not quite matching with adjacent blocks. From frame to frame this error averages out in the human visual process. But if MPG compression is reapplied to the decompressed video, this edge causes the process to create really gross errors because the sharp block edges skew the amount of compression work towards preserving their edge sharpness and not the rest of the frame. This means all the bit rate is working to preserve this distortion, not a good thing.
I've found applying a slight blur to the decompressed MPG video takes the sharpness off the block edges which allows the subsequent recompression to spread the bitrate across more of the frame, producing a better looking result. Still not as good as the original clips, but much better than not blurring.
Fav quote - "Experience is whatcha don't get 'till ya don't need it no more."
System - Athlon 1.4GHz, Win98, Hauppauge PVR250 receiver and compressor.
Software -Magix Movie Edit Pro 10, Nero 6 + NeroVision Express, Moho 4.61, PSP 8.1, Bryce, Quicktime 6.52 pro, Goldwave 5, DVD-Lab.
Cameras - Panasonic GS9, Canon ES8400V, Canon EOS D20 and Canon A70