Chundles said:
ffmpegx is pretty good once you figure it out, it's not free but I don't know what the limitations are
It more-or-less *is* free. If you don't pay for it, just about the only function that's locked-out is the "recompress a >4Gb VOB into a <4Gb VOB". Everything else works fine. That said, I'll still be paying for mine, since it's only $15 and it's such a fantastically useful app that I want to support it.
IMHO, the encoding in ffmpegX is some of the best I've found. I've tried converting an XviD avi to MPEG-2 in both ffmpegX and Toast 7, using the same bitrate/quality settings for each. The quality of the ffmpegX conversion was significantly better than Toast 7 and it was much faster too.
The OP doesn't specify what kind of MPEG he wants to convert to, but
MPEG Streamclip will convert avi to MPEG-4 (albeit without as many tweakable parameters as ffmpegX).