File size is basically irrelevant. It's the running length of the video that's at issue. Most current DVD creation tools including iDVD 5 and 6 can put up to 120 minutes of video on a single DVD. If your video is much longer than that, you'll need to either split the video or compress it significantly more that might be acceptable in terms of quality.
I don't know of a full set to free tools that can accomplish this, though you might find something on
VersionTracker. A $10 possibility is
MPEG2Works, though I can't tell from the descriptions whether or not it will handle AVI. If not, you'd have to have QuickTime Pro to convert the movie to something MPEG2Works could handle.