HI D&C,
Thanks for the input, actually right now what I am doing is capture my VHS through DV Cam passthrough using DVIO. I have plenty of disk space for avi capture and each movie is just about 50min length (Barney's, Blues Clues...all my Son's Tapes

).
Anyway some of the reason why I would like to experiment this option were:
1. Eliminate colorspace conversion (my avi capture through DV is RGB, and some of the filters on the optimal script requires YV12 which produces smoky picture. I can't use YUY2 as it gives me one half of the screen in color pink and the other half is just the normal color).
2. Try to see if I can capture the close caption when capturing to mpeg2 as suggested by Kwag.
3. Try to minimize encoding time, reduce filesize and increase CQ.
I've been doing a lot of testing already for almost 2 months, tried 352x240 and the result is smooth but too blurry. Tried 528x480, well it looks nice but when I try 352x480 my eyes said that's much better, so I'm sticking to 352x480 resolution.

...sorry Kwag I tried to use your recommendation kvcd3 but I think my capture is not cooperating well with me.
Anyway, I just finish encoding a sample clip using optimal script and 352x480 and colorspace YV12....I have to inlcude TMPGenc simple color correction to remove the smoky picture and make the output much clearer and sharper.. (I use bright=20, contrast=90, Gamma=60 and I can't seem to find the correct values when using avisynth's tweak filter, hence I just use TMPGenc). I'm currently burning it now and will let you know what's the result.
And one more test I am currently doing, I found some few suggestions on the forum while i'm doing the encode, such as use MAX GOP 24 instead of 30, use temporalcleaner instead of temporalsoften....and I'll do that right after I finish burning my first testcase....
Thanks,
Dredj