iMovie is not crap for not being able to recognise every format and codec on the planet.
Btw, .avi is only a format/container for a variety of codecs, mostly codecs with high compression, thus .avi is not really a recommended editing format (except with Premiere Pro, but it uses proper codecs).
Therefore your search for an editing application, that is capable of editing .avi files, most likely ones with high compression (Divx, Xvid, ...), will only bring pain to your older Mac. It is easier to transcode the .avi files to a proper format (like the one I pointed to), to stress the CPU less, as those codecs I mentioned (Divx, Xvid, ...) are CPU intensive, especially in an editing application.
But as I have written this many times before, you might find a post of mine explaining it more thoroughly via MRoogle (link can be found via search engine).
You could give Adobe Premiere Pro a 30-day try and see for yourself, if it handles your .avi files to your liking.
PS: Those "movie maker" programs are called "editing applications".