Handbrake sounds like what you need.Hmm. [edit]Hmmmm...But they're not very complimentary about AVI - sorry!
This would seem to meet your needs. Don't be fooled by the name because it also converts files you already have.
http://youtubedownload.altervista.org/
You've maybe already found something but I'm using Any Video Converter, it free. I also have used a trial of Prism, 10 x faster but costs $26.Does anyone know of a decent , free (and safe) mpgeg to AVI converter? It would need to be able to convert mpeg 2 to avi.
You know that avi is only a container format, right? What video codec do you need to convert to?
Have you tried ffmpeg, transcode, mencoder, or anything like that? They'll almost certainly do what you need, and are Free.