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Some details on the software:
Kino is a non-linear DV editor for GNU/Linux. It features excellent integration with IEEE-1394 for capture, VTR control, and recording back to the camera. It captures video to disk in Raw DV and AVI format, in both type-1 DV and type-2 DV (separate audio stream) encodings. This is the main tool I use for the actual editing.
FFmpeg is a complete solution to record, convert and stream audio and video. It includes libavcodec, the leading audio/video codec library. FFmpeg is developed under Linux, but it can compiled under most operating systems, including Windows. I use FFmpeg primarily for conversion.
GNU VCDImager is a full-featured mastering suite for authoring, disassembling and analyzing Video CD's and Super Video CDs. This is what I use for creating the actual VCDs. It's also great for ripping VCDs for, er, archive purposes.
It's not as complicated as the descriptions here make it sound.