You can process the audio and the video together, because TMPGenc process the video ( mpeg-1 ) in awesome quality, but the audio sucks!
We prefer to separate the audio from video because with headache we can get a much better audio quality, and muxing with bbmpeg some problems like audio sync can be totally resolved, because some players doesn´t like the way TMPGenc mux the mpeg, but they love the mpeg´s created by BBmpeg.
In some of my initial projects, I was having audio sync problems, but when I changed the way to make the mpeg to the way Black prince explaned, my problems sttoped to appear in my movies.
And if Kwag says to make the vcd this way, hey dude, you´ll have to listen to him !