make it a two part process (i assume you are on windows):1. editing (google lightworks beta, its free but not really that simple)(export uncompressed)or1. edit: you may also check avisynthhttp://avisynth.org/mediawiki/ImageSource2. encoding to xvid/mp3(the usual virtualdub procedure i would imagine, but i didn't encode something like that for years now.., you may want to check AVC/h.264 in mp4 container)
...but it only outputs wmv files, and I'd like something a bit more versatile (e.g. AVI files with XViD/mp3 encoding).