Thanks for all the tips, everyone. After combing through the dandruff on MacNN, AppleInsider, and Apple's cavernous Support Discussion fora, I have solved my problems. Here's an explanation of what I learned for future reference if anyone has these problems/questions:
Answer 1: "Record with Camera" vs. "Import" in iMovie 4
Appearantly, digital cameras that can play back analog content *and* output it as digital via FireWire are a rarity, and thus iMovie gets confused.
When iMovie detects a digital device attached, it presents the "Import" option, which will digitally import the content until you tell it to stop. Thus, while it will happily go on importing for hours, internally, it segments files into chunks no larger than 9 minutes/ 2 GB. (This is in the background and hidden from the user.)
When iMovie detects an analog device attached (such as an iSight or another webcam or VHS), it presents the "Record with Camera" option. Using the "Record with" option stops after 9 minutes/2GB, but not because of the file chunk limit (which is handled transparently and internally), but because importing from an analog device yields analog data, and iMovie works with DV, so the analog data needs to be converted to DV. So after reaching a 9min/2GB limit, iMovie stops and converts the analog data to DV. Then you can resume and continue with the next 9 minutes manually.
What was happening to me was that I had analog media in a digital device, and while my camcorder was reading the analog data and automatically converting it to digital when sending it to iMovie, the program thought that the camcorder was analog, and this imported 9 minutes of the video, and then went on to convert what was already DV, to, well DV. o_0 Hence the horrifyingly large file sizes.
Appearantly there's an internal mechanism in each DV camcorder with analog support that sets the mode the camera is in (analog or digital), and there is a time delay when this is set, so what happens is probably something like this:
1. Plug in camera into FireWire port.
2. Camera to iMovie: Hi, I'm a DV cam!
3. iMovie: Welcome! Setting mode to DV, showing "Import" option.
4. Camera: Hmmmm, I have an analog tape in. Sorry, I'm an analog device!
5. iMovie: Setting mode to analog, showing "Record with" option.
6. *iMovie stops listening*
7. Camera: Wait, wait, wait! I may have an analog tape in, but I can output it as DV on the fly! Change to DV mode, please!
8. *crickets chirp*, nothing happens as iMovie is no longer listening
To remedy this various people at the Apple Support fora have recommended various "plug FireWire in, plug it out, insert tape, remove tape, turn off camera, plug in FireWire, turn on Camera, add tape, remove Firewire" rituals that are sheer madness. None of them worked for me. I think the "trick" that does make it work properly is different for each camera, but this is the one that ended up working for me:
1. Plug in camera.
2. Turn on camera.
3. Open iMovie.
4. Switch to the camera window in iMovie.
5. Insert analog tape.
6. Wait until the "Record with..." appears.
7. Eject analog tape.
8. Insert digital tape.
9. Wait until the "Import" button appears.
10. Eject digital tape.
11. Insert analog tape.
12. Click "Import" before it disappears.
Worked everytime so far.
Answer 2: Best Quality vs. Best Performance in iDVD 4
Basically, Best Performance is if you want a DVD "now", and Best Quality is if you want a DVD "right". Best Performance is much faster but lower quality, and uses CBR (constant bitrate) encoding. Best Performance also employs iDVD 3's compressing technology and is for about 60 minutes of content only.
Best Quality, on the other hand, uses Apple's professional Compressor application's technology, and uses VBR (variable bitrate) encoding. This takes much longer because the compression algorithm is more advanced. You can have just about 120 minutes of content with Best Quality.
Although quality is often in the eye of the beholder, the following seems to hold true:
Best Performance, 60 minutes: Quality around 80% or lower of DV
Best Quality, 60 minutes: Quality around 100% of DV
Best Quality, 120 minutes: Quality around 95%-90% of DV
