You have to re-encode the video, so it could lose quality, based on all the settings you choose for the new MPEG-2 compression. There also are not many freeware MPEG-2 encoders, because the MPEG-2 format is licensed. The few that exist are not the easiest to use, often requiring Avisynth input.
Have you considered simply adjusting the brightness on the TV set?
Also understand that "dark" and "underexposed" are not the same. You can't brighten underexposed videos and get anything other than muddy noise. And based on your description, you likely have underexposed video, coming from nighttime use of a cheap point-and-shoot. (Decent camera for stills, I'm thinking, if it's anything like my Sony P&S in low light, but not so hot for low-light video.)
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