'One click' converters are usually rubbish.
Amen!
Have a look on http://www.doom9.org/ He mainly does guides for DVD quality rips etc, but the forums are full of useful info.
Unfortunately he doesn't deal with converting one kind of AVI to another, or decreasing resolution. I'll have to read some of the ones he does have, just in case the techniques are applicable. I do use his method of using DVD Decrypter & VirtualDub to rip and convert DVDs. Steve