DVD .VOB to .DV conversion woes

I'm pulling together media for a DVD on an obscure sadguru from India. A friend of mine over there shot the footage on Hi-8 stereo and sent it to me as a DVD.. meaning .VOB files.

My goal is to begin this project with 08 and 06HD, to iDVD. Later I'll move to Final Cut Express.

I copied the DVD Video_Ts directory to my hard disk so I wouldn't be dealing with the relatively slow DVD drive..

After adjusting the deinterlacing settings, Handbrake converts the VOBs to MP4 and looks good, and of course they open fine in iMovie.

..But the files are 1/3 the size of the .VOB they came from and I'm worried about the loss of visual information.

So I'm looking for a .VOB to .DV converter. MPEG Streamclip allegedly does .VOB to .DV, but every time I run it, it stalls and tells me to go buy some software from Apple..

Is my assumption that .DV is less lossy than .MP4 correct? If so --

What would you use to import this?

thanks! I'm stalled!