What codec did you use? AVI is just a container that could have any codec. What was the original source? You should use a codec for your render that is at least as good as your source codec.
As for the DVD, you’ll need to render to MPEG2 and decrease the average bitrate from the default of 6,000 mbps to around 4,500 mbps. I would use the Two Pass option to get the best quality possible for that bitrate. You might also want to use a double layer DVD which would easily fit 2 hrs.
~jr
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