First you will have to rip the movie portion of the video DVD with the free Handbrake app by copying the VIDEO_TS folder from the disk to the desktop. The run Handbrake on the .VOB files in the folder to get the movie you want if there's more than one.

After it's been ripped, edit it with iMovie or other movie editor of your choice. You'll need to create a new video DVD with an authoring application like iDVD or one of the video DVD authoring apps available from the App Store.
Whichever app you use to create the video DVD follow this workflow to help assure the best qualty video DVD:
Once you have the project as you want it save it as a disk image via the File ➙ Save as Disk Image (in iDVD) menu option. Most apps have a save as .dmg or .iso option. This will separate the encoding process from the burn process.
To check the encoding mount the disk image, launch DVD Player and play it. If it plays OK with DVD Player the encoding is good.
Then burn to disk with Disk Utility or Toast at the slowest speed available (2x-4x) to assure the best burn quality. Always use top quality media: Verbatim, Maxell or Taiyo Yuden DVD-R are the most recommended in these forums.
