I have received several questions about the DV camcorder connections and the AVI file conversion via hardware. I have done some more research, and found the following:

The Snazzi III card can do real-time encoding of a AVI file (it has to be a DV file) to mpeg using the hardware encoder chip. However, you need to connect a DV camcorder to the card so the DV file can be sent to the camcorder, be converted to analog audio and video by the camcorder (the camcorder put in record mode and have a DV-analog loop through), then be connected to the analog inputs of the Snazzi card for real-time encoding. This is the twist of the story. I have no idea why they don't send the DV file to the snazzi card via the PCI bus, however they don't. So, to do real-time encoding in hardware of a DV file on your PC, you need to have a comcorder connected that has a DV-analog loop through, and yes, you have to use the analog input of the Snazzi.

I (also assume) that DV camcorder to mpeg real-time encoding has to be done via the analog inputs of the Snazzi, not the DV input. Since I don't have a DV camcorder to test the Snazzi, the information comes from the manuals.