Considering that VOB (MPEG-2) is a delivery format, and not an editing format, it's not surprising that PrPro does not do a good job with them. There are conversion programs, that will take the MPEG-2 and convert to DV-AVI Type II files - the native editing format for PrPro. Stripping out the MPEG-2 from the VOB can be as simple as renaming the VOB to MPEG, but this can be frought with problems. Other software can handle the stripping process better.
Actually, Premiere Elements does a better job of working with some VOB files, though many find that third-party conversions work better first.
You could try the "rename" proceedure, though you'll get muxed files, and Encore likes elemental streams better. You can de-mux the files, but if you're going that route, may as well as convert to DV-AVI Type II, and Import those into PrPro for either using DL, or Exporting as elemental streams.
Since Encore is not an editing program, but an authoring program, I am not surprised that it cannot handle VOB's. Also, it now ships with a great NLE, PrPro, so I'd suggest using that for ALL editing.
Just to clarify my original post. I never backup my project to DVD as a movie (which would result in VOB). I agree that using the VOB MPEG-2 format is not a great option. But there are times when all I have is a DVD and I need to import footage as part of a new project. I currently need to use other applications to convert the DVD to AVI and then import the AVI into Premiere. It would be much simpler of Premiere was able to read the VOBs and import them as assets.
Being able to use VOB files directly in Premiere makes a heck of a lot more sense than in Encore, where it makes literally no sense at all.
The problem with utilizing VOB's are that they are system multiplexes - deliverables that are heavily modded to suit DVD-Video too, not editable assets and this is what a lot of people seem to forget.
It's more than just the Audio & Video. It's everything. Subtitles, Line21, BOV's, and a lot of the information is referred from the _0.VOB file which (from memory) holds all the NavPacks.
If premiere was to handle this, it would need to be capable of complex demultiplexing, and direct handling of AC3 streams too. This is going to increase the cost as Dolby Digital surround decoders would immediately be mandatory in such a system. Add $300 to the cost of the application, just for that.
VOB support must include 5.1 surround decoding, and that means the mandated stream type which is most common. And this is not free technology.
Anything that does this for free is a hack, and will not reliably produce DVD compliant results.
All this aside, it would be great if VOB handling of some sort could be done but what would the cost of implenenting this be.