there are programs to play avis on a mac like VLC.
i've used "isquint" to convert avis to qt but it routinely
screws up the color to where its unuseable or unwatchable.
What are you trying to do? If you want to take an xvid or divx avi and turn it in to a VCD or DVD Toast 7 is the go imo. If you are just looking for something to transcode video ffmpegX is probably the best app I've used for that.
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).
By the way, if the avi is divx or xvid you can convert it to mp4 without transcoding. Check out the mpeg4ip tools. Just dump the video/audio, convert audio to AAC, mux into mpeg4 file. no loss in video quality 😉