For me, "transcoding XviD to DivX" is like "transcoding LAME MP3 to Fraunhofer MP3". XviD and DivX are the same format, that is MPEG-4 ASP. Only the encoder is different. Just as one MP3 decoder can decode both LAME and Fraunhofer encoded bitstream, XviD decoder can decode DivX as well, and vice versa.

Most XviD and DivX encoding are stored in a manner called VfW. There is this thing called FourCC that you can change just like that. For example, you can just change XVID to DX50. Changing FourCC might be useful for some standalone player that recognize DX50 but not XVID. You just change it and it works magically without reencoding.

However there are minor issues of compatibility between DivX and XviD, and this rarely happens. The problem is MPEG-4 ASP specifies the tools QPel and GMC. Quite some number of standalone players don't implement these - the decoders are not MPEG-4 ASP compliant. XviD does use QPel and GMC but can be disabled. DivX too uses it, also can be disabled, and the GMC is a simpler version than the standard. So DivX player might support the simple GMC but fail to decode XviD standard GMC. Nevertheless, GMC is usually disabled in XviD, so changing fourCC almost always work.

H.264 is newest video compression from the MPEG family. In the discussion below, "good compression" means relatively good quality at low bitrate.

From oldest to newest,
MPEG-1 used in VCD. A DCT based compression, with motion vectors.
MPEG-2 used in DVD and digital transmission, compression part very similar to MPEG-1.
MPEG-4 Part 2, we usually only look at ASP (advanced simple profile). 3ivx, DivX, XviD are all MPEG-4 Part 2 encoders and decoders. Compression is better than MPEG-2.
MPEG-4 Part 10, also called AVC or H.264. Even better compression than MPEG-4 Part 2. x264 is an encoder for this format. It is under GPL (license) and produces very good compression, surpassing quite a number of commercial implementation (according to some review).

To summarize, if you use x264 to encode your own videos, you can gain a lot of disk space. Using AAC audio codec, a 5 minute video (VCD quality according to my eyes and monitor) can be easily compressed below 8 megabyte. Compare to real VCD MPEG-1 constant bitrate compression, 52MB.

For the FF3 trailer...
The source file is "FLV4" encoded. The FLVSplitter that came with K-Lite didn't work for me. I downloaded http://ffdshow.faireal.net/mirror/Media%20.../FLVSplitter.7z and regsvr32 it. Then, I can play in Media Player Classic. This is all that I need: when I can get it load using AviSynth, I can encode to other formats. Through some experiments, I find this FLV4 is On VP6 compression; if I remux to MKV changing the fourCC from FLV4 to VP62, it can be decoded by On VP6 decoder, but the picture is upside down. One more thing, the FLVSplitter downloaded contains not just splitter, but the video decoder for FLV4.

Source remux:
http://xenon4u.dyndns.org/FF3/source%20remux.mkv (12.05MB)
Video: FLV4
Audio: MP3

Old technology compression:
http://xenon4u.dyndns.org/FF3/TMPGEnc%20MP...-%20mp3gain.mpg (14.86MB)
Video: TMPGEnc MPEG-2
Audio: MP3Gained source MP3

So-so technology compression:
http://xenon4u.dyndns.org/FF3/XviD%20-%20mp3gain.avi (8.56MB)
http://xenon4u.dyndns.org/FF3/XviD%20-%20mp3gain.mkv (8.43MB)
http://xenon4u.dyndns.org/FF3/XviD%20-%20mp3gain.mp4 (8.45MB)
Video: XviD MPEG-4 ASP
Audio: MP3Gained source MP3

New technology:
http://xenon4u.dyndns.org/FF3/x264%20-%20aac.mkv (5.74MB)
http://xenon4u.dyndns.org/FF3/x264%20-%20aac.mp4 (5.74MB)
Video: x264 AVC
Audio: neroaacenc AAC

Firstly, can you get the FLV file to play using DirectShow filters? That means, you need to be able to play it in Media Player Classic (MPC) or Windows Media Player. The solution is to use the FLVSplitter.ax.

Then decide your destination format and encoder. Most good quality encoders accept AviSynth scripts. So, use DirectShowSource in your AviSynth script, do trimming, cropping, inverse telecine if needed, denoise, temporal smoothing. And there you go.

The audio part is actually taken out and encoded separately. My method is not likely what you want. I haven't try SUPER even though I downloaded it months ago. If I remember correctly how SUPER works, you should be able to convert successfully when you can get the FLV to play in your MPC.