If you get QT Pro for $29 you can cut and paste and trim just about anything.
The only problem with MPEG is that when editing, if you cut away "keyframes" you also lose any of the frames either side of it referenced to that frame and get blank black frames and glitches. So...
You need to convert your mpeg movie to mjpeg or to uncompressed ie: the "none" compressor by "exporting" it through the QT pro menu, then you can cut and paste and edit with abandon. If you buy the XLR8 Interview 2.0 analog video over USB capture device, you get StrataVideo FREE which will allow you to do all sorts of editing, much more versatile than iMovie which is really only for DV streams at DV picture sizes. I'm guessing your mpeg may be 640x480? Could be a problem.
Hope some of this helps.