well, to split mpeg i use tsunami (
http://www.tmpgenc.net/ )
click on 'File', 'MPEG Tools', then goto the last tab, 'Merge & Cut'. Use the slider and the curvey brackets to cut which way you want. you need to go through it twice, once for the first part you cut, and again to cut the second part. at that point you'll have all 3 files, the whole, first, and second.
as for the AVI, not sure what to tell you there. i use vidomi (
http://www.vidomi.com/ ) to encode my VOBs to avi and you can set the file size of the AVI, or tell it to encode all the VOBs to 2 AVIs that will fit on a 700 meg cd with some room for whatever you want to add( say, make 2 AVI files for all the VOBs, and make both AVI 2 megs smaller that a 700 meg cd, so 698 meg AVI files, or 4 megs room on each, for 696 meg AVI files, whatever you want. one thing i realy like about vidomi is it can batch process/encode takes it about 2 1/2 hours to take VOBs to one 698 meg divx AVI file (pentium 4 ht 3.02, 1 gig ram)
if there are better way, i wouldn't mind some info as well.