no. The data rate has to be to specs for the dvd players to players to be able to play it. whether or not its really compressed or not, it has to be to specs. Its all about how much time the file uses.
If I'm reading your post correctly, you're not exactly "putting the AVI on a DVD"--that would involve either using the additional DVD-ROM files features of iDVD to add the actual .avi file or just burning a data DVD, either of which wouldn't let you play the video on a standalone DVD player--it'd just be another file on the disc.
The video on a DVD is in a specific format (MPEG2), which is different from AVI (and .mov) and has its own compression system. iDVD will fit up to two hours of video on a disc, with steadily decreasing quality for any amount between 1 and 2 hours, as it has to be "squeezed" more, regardless of the quality of the original video or how much space it took up on disk. Worth noting, though, that whether you put 1 hour of video on the DVD or 2 hours, the disc will be pretty much full, as iDVD will use as much space as it can to maximize the quality.
Also worth noting: there are MANY different video formats that can be in an .avi file, but a modern one using a codec like DivX or XviD can produce video of an equivalent quality to a DVD with a much smaller file; this is because the format is newer and is designed with both better techniques and more powerful computers in mind, but it does you no good in fitting more video on a standard settop-playable DVD.