Toast will do this for you automatically ... but you have to shell out some cash.
If you want a two step process, then look into DVD Imager. It'll take a VIDEO_TS folder and do something to it (can't quite remember) to allow you to use Disk Utility to burn onto a DVD.
There is an app called VisualHub, It will convert a video file(avi,mp4,mkv ect.) to a .ISO disk image, also try freedmg or idmg for putting files in a .DMG file.