Would there be a point to rendering to avi? If not then do not.
Each time you render to a different format or bitrate you degrade the resulting video.
For Mpeg2 keep the bitrate higher for best results. On a single layer DVD R you can get about 2 hours of video with AC-3 or Mpeg audio using an average bitrate around 4k. Use 7.5k to 8k for 1 hour of video.