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This tip is by David Harbsmeier.
It is always best to start the editing process with the highest quality, least compressed video format you can obtain. However, sometimes the only source you have for footage is from a DVD*. But since DVD footage is highly compressed and specially formatted as VOB files in order to meet the DVD-Video specification, the files on the DVD must be converted if you plan to edit them in Final Cut.
There are many apps available for converting DVD footage, but it is extremely important that you use the right tool for doing this if you plan to edit the footage. Beware that some apps, like Handbrake, are not designed to convert to an editing format. Using the wrong app can mean wasted time, unneeded quality loss due to multiple conversions, needless rendering in FCP and can be just plain frustrating.
The two recommended apps for conversion to an editing format are DVDxDV and MPEG Streamclip.
MPEG Streamclip – http://www.squared5.com/svideo/mpeg-streamclip-mac.html
Nick Holmes has prepared an excellent, step-by-step tutorial on how to do this using the freeware application MPEG Streamclip which can be found here: http://www.secondchairvideo.com/?p=739 (thanks, Nick!). Be sure to read both parts.
* always make sure you have proper rights and licensing from the copyright owner when using any footage other than your own. DVDxDV and MPEG Streamclip should not be used to convert footage from commercially released DVDs.