if it's even a remotely new camcorder (i.e. within the last 2 years or so), it will probably have the pass through feature. i'm betting it is has the feature, though, as i believe Sony institued the analog>DV pass through feature on digital8 camcorders before miniDV became more commonplace.

and i'd say no, don't spend the dough on a Canopus capture device if you have a miniDV cam with pass through. quality-wise, there's either no difference or it's neglible. (definitely not worth an additional $250 investment.) keep in mind, capturing VHS > camcorder pass through > firewire > DV .AVI files on computer will give you so much better results than a lot of things out there (standalone DVD recorder, $50 "usb realtime mpeg capture devices" etc.). a Canopus/Datavideo DV capture device and/or camcorder pass through are really the best quality you can find in the consumer price range.

personally, even if the Canopus MPEG capture devices were great quality, i still wouldn't get one as i like to edit footage before putting it on DVD. and the last thing you want to do is edit an MPEG video then re-encode it back to MPEG. (that will break down any quality the video has in a hurry.)

S-video output on a VCR isn't "necessary"... but i always use it. if your TV has an S-video input and your DVD player has an S-video output, plug up the DVD player using the S-video plug. even official DVDs that you thought "looked perfect" with a composite (normal RCA) plug will look much better using the S-video connection. point being: yes, S-video connection does make a difference.

you could actually take that $200 or so for a capture device (actually, $100 will work) - since you probably won't need a capture device - and get a nice SVHS deck with an S-video output. and plenty of SVHS decks have the 'pseudo'-SVHS playback, to optimize playback quality even on normal VHS tapes.

lastly, make sure you get a GOOD MPEG encoder (to convert the video from DV .AVI format to MPEG-2 video). ProCoder 1.0 and 1.5 are good (2.0 is actually worse quality than previous versions, from the test results i've seen and read). TMPEG Encoder is good. MainConcept is okay. CCE = king of the hill, IMO. and by that, i mean, the encoded MPEG-2 video will look more like the original captured footage than with a lot of other encoders.

there's nothing like taking a VHS (played in SVHS deck with S-video output) > DV conversion > computer > CCE with 5-pass VBR. even at lower video bitrates, the quality is top notch. on my conversions, i use an average bitrate of 7000 and keep the audio as uncompressed LPCM. in back-to-back comparisons on TV sets, you can't tell the difference between the source tape and the created DVD (and that's without any 'tweaking' of the video).