There wiil always be loss of quality when you re-encode a video, but many mpegs are encoded at a very high datarate and it may not be too noticable. The problem with re-encoding is that the compressor will attempt to duplicate the compression artifacts that the first compression invariably includes and will make them all that much worse. DivX doesn't have any magic bullet to avoid this process. To illustrate this for yourself use QT to make an uncompressed still image of a frame from the first encoding and then do the same with the same frame after re-encoding. When you examine the two frames you will be able to see that the re-encoded frame is lower quality.
Actually, I have better luck using On2VP3 for re-encoding. It seems to minimize somehow the compression artifacts. I have VirtualPC and so have been able to re-encode an mpeg with both DivX and On2VP3 to make such comparisons.