It ain't free but Pocket DVD Studio can also handle AVIs.
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Originally Posted by TalynOne
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Why isn't this awesome app talked about more?:
http://divx.ppccool.com/
(Get the latest beta from the download section, works great!)
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I've used this one.... For some reason I have never gotten it to produce a movie where the audio/video was in sync.
It's come close -- but never perfect.