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VOB files use MPEG-2 video compression with a variety of options for audio (PCM, MPEG, DD). Anything that's not MPEG-2 and of a file size that will fit on DVD disk (DVD-5, DVD-9) must be transcoded before burning.
Compression formats are generally independent of whether footage is interlaced or progressive. You can transcode interlaced to progressive, or interlaced to interlaced. You might be able to transcode progressive to interlaced but I cannot imagine why. I've never heard of anyone trying it.
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Tripp Woelfel
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