~Rise from your grave~
I actually do not have a DV500, I was making a suggestion
I do happen by change get ahold of Premiere 6.5, which has native support for mpeg2, so all you need to do is demux the video out of the vob....
As for interlacing, it's really not a problem unless there is telecining involved.. GRR which there always is. So! I suck a IVTC so I just leave it be @ 29.97fps and use a area-based de-interlace util.
I hear coud things about decomb w/ AviSynth, but I haven't played with it since I haven't been making many AMVs as of late..
~klinky