I figured out the answer to my own question.
I discovered that you could use Disk Utility to create a DVD/CD Disk Master image (.cdr). .CDR files, for some reason, are compatible with iMovie. I am able to go to record from camera and import the video files the same way you would hook up a camera via firewire.
Below are the steps I took (for the benefit of others) ...
1.) I popped in the DVD and went to Disk Utility. You will see the DVD file (for example/ Mary's First Birthday Party) on the far left right below the name of the DVD Drive (for example/ SuperDrive).
2.) If you click that DVD Drive, go to File, then New, and then finally DIsk Image from (The Name of your DVD File). This is the last choice on the drop down menu. Don't click create new image from folder.
3.) You create the name of the .cdr file, make sure you select CD/DVD Master under the Image Format drop-down menu and then the location of the file.
4.) When you are finished, you go to iMovie. Click on File, then Capture from Camera. iMovie recognizes the .cdr file as if it was a camcorder. You will see all the files and will be able to import them to iMovie.
5.) After I could send the video to FCP X for actual editing. You could always just edit in iMovie if you don't have FCP X.
This is great too if you need to make a copy of a DVD.
Again I think the best thing is able to import footage right from the original source (the tape you recorded your footage on ... in my case/ a mini-DV). But this method is definitely better than Handbrake, which compresses the files to .mp4 files. At least with .cdr files, the original footage from the DVD isn't compressed. Handbrake is great if you already have a .mov file and you need to compress it for the web. If you use FCPX like me, and don't want to spend $50 on Compressor, this is great as well.