Great. Works a charm. VDub always used to irritate me how it would open MPEG1 but not MPEG2.
Use DVD-Decrypter to rip your DVD using the stream processing option with demux. Once you have an AC3 file and a M2V file, work with your audio to get a d**n good-quality wav (maybe consider lowpass at 13400Hz and resample to 32kHz rate). Remember to use heavy compression for the DRC in Azid.
Just to point out that WIZARDMAGIX tried to open an ac3/mp3 in VDub -- VDub only supports files within the WAV container -- ie with a RIFF header for windows' ACM. So use uncompressed WAV... or encode using Lame-ACM or select Wave-MP3 output in BeSweet.
Get an ACM edition of AC3 (you can find one on free-codecs.com). Use the ACM-AC3 codec in VDub (audio --> compression).
The rest is simple: open your doo-dah M2V file. Use full-proc mode and add the filters you need (deinterlace for TV stuff, then resize). Pick a good video codec (XviD or whatever). Go go go!