Well, let's see.
TMPGEnc to merge the multiple avi's into 1 file, then to split audio / video out.
CoolEdit96 to clean the noise from the audio, RazorLame ( Maybe, not sure if I wanna go 100% compliant w/ VCD and do mpg2 audio or not )
TMPGEnc to resize to a non pal resolution, resynch to 30 fps, and apply a noise reduction, Simple color correction and sharpen edge filters. Pixelation should be taken care of by a VBR and high quality encoding. From the 10 minute test section I've reencoded, there is much higher image quality from what I originally had. I may need to tweak the colors a bit, but I won't know until I actually encode the whole thing.
I tried Vdub/Nandub and other encoders that I could find, but all of them barfed on it.
TMPGEnc works great.