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PRE doesn't especially like VOB files. You would be best converting them to DV-AVI before using in PRE. This article will be helpful - What tools can I use to convert my video to DV-AVI?
If you have been satisfied with the results in Windows Movie Maker then that is probably your best tool to perform the conversion.
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Unfortunately, you are starting with material that has already been compressed heavily to the MPEG-2 format/CODEC. Then you are editing and outputting to a Scaled up (the DVD-spec for PAL) and then re-compressed to MPEG-2. This is a triple whammie. Because PrE does not do "smart Rendering," what you see is what you will get.
A better choice for limited editing, basically just Trimming the material, would be a program that does "smart Rendering," where all material, that was not altered, except to remove portions of it, would NOT be Transcoded a second time to MPEG-2. I believe that some of the Sony Vegas products do this, but there are others. If you Google "smart rendering," you will see several programs, that feature this. I would choose from those.
You will still have the Scaling issue, unless you completely allow your smaller than spec. material to be surrounded by black. If you Scale in an editing program, even with smart Rendering, it will then need to be Transcoded to MPEG-2 all over again.
With that footage, the choices are very limited.
Good luck, and sorry for the bad news.
APE8 does not do "Smart Rendering" for mpeg2?
Is that realy true?
Yes, that is true. PrE, like PrPro, is based on an I-frame, DV-AVI format. Your material is GOP, and to get frame-accurate editing, the material must be converted, either internally, or externally, to I-frame. This ARTICLE will give you some background on GOP.
Some NLE's are designed to handle the MPEG, GOP, material natively, and if only the Durations have changed, use those MPEG's as they are. Google will give you a list of the various programs, that offer "smart rendering."
Thanks for the advice. I think I will be purchasing a new video camera! And I will stick with Movie Maker for those projects that use the VOB files.
Good luck with your Projects,