That seems fine, yes.
- Capture NTSC as NTSC
Set input color depth to be YUY2 in VirtualDub
You need to be careful with appending clips, but stream copy should disallow mismatched sources.
FYI: Stream copy output mostly takes time due to drive speed, the I/O. If using SSD, it'll be markedly faster.
used to cut, stream copy output.
- Restore underexposed video, as best as possible. That probably requires Avisynth, for best results.
Remember to mask overscan.
Encode a cleaned copy to H.264. Lossy encodes need clean video, otherwise it will become soft and blocky, not enouggh bitrate. The encoder also matters. For H.264, I use MainConcept
payware, or Avidemux
freeware, though I'm liking Hybrid more and more (selur has done excellent job at creating it).