Yes the amvapp will have all the tools you need for editing videos. Although i wouldnt recommend editing with Huffyuv or lagarith if you have not much hdd space. I would recommend loading the VOB or MPEG-2 into DGIndex then converting it using the plugin converter VFAPIConv which converts the movie in an .avi format (making it extremely easier to edit) with exact same quality just using about 16mb for a 2hr movie (btw do not delete the original .vob or.mpg source as that is where the plugin reads it from).
hope that makes sense

If not just read the guide as mentioned by JaddziaDax.