To answer question 1: DV AVI is technically compressed video, but is just not compressed as much as many of the other formats, so you still get excellent quality video (depending on your source video, of course).
As far as question 2 is concerned: In order to create a DVD, your video MUST BE in MPEG-2 format in order to be read by MOST DVD players. Some newer players will read MPEG-4, but your safest bet is MPEG-2.
There\'s nothing like video editing ... Taking the most boring subject, and making it look exciting ...