Handbrake is not the right app if you plan to edit the video in iMovie. Handbrake does not create file types/codecs that iMovie or Final Cut can edit.
You will need MPEG Streamclip (free) + the Apple QuickTime MPEG2 Component($20) to convert the DVD for editing. You need both, as MPEG Streamclip utilizes the QT MPEG2 Component for the conversion.
Your profile indicates you have Mt. Lion (10.8.2) on your Mac. There are some special installation instructions for installing both applications on a Lion/Mt. Lion Mac - read it on the MPEG Streamclip website first, before you install either application.
If the DVD video is 4:3 standard def, convert it to QuickTime/DV-DVCPRO NTSC. If it's 16:9 highdef, convert it to QuickTime/Apple Intermediate Codec. Import the resulting converted files into iMovie and you will be able to edit them.