AVI files can be multiple things...
An AVI can be completely uncompressed video - it would be very large... 2 GB for every 10 minutes.
or
An AVI can be a container for another video type - usually a DivX file.
Either one of these can be dropped into Toast 7 and burned to DVD no problem.
Importing into iMovie is an unnecessary step, and not even possible if it's a DivX file... iMovie is very particular about the files it can support and DivX is definitely not one of them.
Note... if it's a DivX file with Dolby audio... you're out of luck... there's no way to get that to play on the Mac right now due to a change in QuickTime 7... the video will play just fine, but the audio won't.