try and capture using the huffyuv codec at as high a resolution as you can.
i'd think about converting to dvd-standard mpeg-1 for the end format. you'll get hours and hours on a dvd, and it'll be about as good as a vhs.
i'd think about capturing with iuvcr, premiere is a bit bulky for just capping.
if you can't use the disc space for capturing to huffy, try capping to high bitrate divx like i do. it's as good quality visually, but a fraction of the file size. you could maybe even cap to dv-fomat avi. depends on the disc space and speed of your pc. try all the ways i've mentioned, and see what you prefer.
if it turns out that it looks crap as mpeg-1, you've still got the capture files to encode to mpeg-2.
don't ever cap to the format you want to burn to, though.