[pawel]

Depends on version and setting you use. 1.6 has no video re-encoding capability. However, it's possible to transcode audio. I don't know version 2.x but new 3 can re-encode both audio and video.

Check information on clip stream and compare it to 'track setting' option in 'Source setup' window. In default setting TMPGEnc DVD Author does not re-encode the source (unlike most other authoring programmes). So, you won't degrade anything. Moreover, TMPGEnc corrects some errors in video stream which very often are present in captures made by older stand alone recorders.

Hope it helps,
Pawel