jwillis is mostly astute in his observations.
I'd question whether "millions" had no trouble with AIW cards, at least in terms of actually using it for quality capture.
- Many never used the AIW side at all, mostly getting the cards for gaming. (And yes, I realize non-AIW existed, but the mentality of gamer nerds is often "I must have the best beefiest everything card". That meant poo-poo on lowly Radeon, hooray for AIW -- even if never used. I don't get that either.)
- Many more simply used to AIW for off-air recording in the pre-DTV era, often using the terrible defaults.
- Many never came here, and simply assumed "homemade video must look bad".
I use ATI MMC all the time for MPEG. From 2001-2006, always DVD-spec MPEG (DVD recorders from 2006 onward). From about 2012 to now, 15mbit MPEG.
I used ATI MMC for AVI many times pre-2009, because
VirtualDub wasn't that great in the 2000s. The only issue with it is that, on some systems, it caused sync issues (and not from dropped frames). I didn't do much AVI at all before the late 2000s, due to size. Remember, a 100gb IDE hard drive was "big" (and expensive) in 2001, and 35gb/hour was painful to work with.
But I'm not in sync with jwillis conclusions...
Namely in NOT using the 9600/9800 AGP cards, nor in dumping AIW altogether for USB. That's taking it too far. The cards do work more than not, so don't assume you'll have issues before even trying.
And AGC wasn't an issue on AIW. No idea where that's coming from.