I use Adobe Premiere for my animation making whether its for DVD use or web distribution.

You can take the uncompressed .avi file into Premiere and then re-export it as an .mpg, .qt, or divxx (provided you have the proper codecs to do so.)

Another popular way is to render the entire animation as .tga files and then pull them into Premiere or another NLE. Beauty of using .tga files is that it's easy to touch up individual frames for post production processing, etc.

There are a few NLE editors out there that are free that might do the job for you too, but I don't know any names off the top of my head.

Good luck.