A friend at work showed me this plugin called
dCut. Apparently it edits and compresses DVR-MS file to I guess would be .wmv with a touch of the remote! You still have to edit the files by hand, but the entire process can be done using your remote, simply be selecting the parts of the video you want to keep. Their website is down cause of bandwidth issues but from what I've heard the software (which is free, btw) is in it's beta stages yet it is very useable and works great.
EDIT: Of course, I just discovered THIS - DVRMSToolbox which seems to be able to do anything! Namely, converting DVR-MS to MPEG AND cutting the commercials out automatically.
Run that, and then run AutoGK to convert the mpeg to divx....and I think I just figured out what to do when I start recording games
