I know this has been beat to death but I did not find any answers in the archive.
I see that others have used the products such as the Canopus ADVC-100 but in the interest of cost savings I plan to use the pass-thru feature of my DV camera to 'capture' my old vhs tapes. The length of each movie will be 2 hours plus a sensible navigation menu.
I can only capture at full D1(740x480) with this method.
When I encode to MPG would I be better off at half D1 with say a bitrate of 4K or Full D1 at something less than 5K.

I realize that common sense says that half D1 would be the way to go but does the interpolation from D1 to half D1 cause any additional losses that may offset the bitrate/pixel advantage of converting to half D1 ? I wanted to hear the opinions of others because I'm not sure my eye is the best guide.

These are family movies and not episodes of a television series so quality counts. I want these DVD's to be my new masters for future editing as well.

Also I have the option in moviefactory 3 to capture to mpeg2 but the few tests I did showed the quality to be better to capture in AVI and then encode to mpeg. WHich makes sense since there is more processor availabe to do it in a seperate step.