Out of curiosity, what codecs (audio and video) do the AVI’s you obtained use? (If you’re unsure use a tool like
gspot,
avicodec, or
mediainfo to find out.) I would guess some flavor of DV (DVSD, DV50, or something similar).
I don’t know much about the compression rate of DV, but you could try re-encoding the contents using
VirtualDub or
NanDub (both freeware and use the same interface; NanDub supports variable bitrate (VBR) audio though).
Open the source in VirtualDub. Click Video, Compression. Then pick a codec. These days
DivX and
Xvid are the popular choices (both MPEG-4, part 2 family codecs). Then click on the configure button to adjust the encoding parameters to your liking*. You can adjust quality and size that way. You can choose other codecs if you want and play with them to see the results you get. Do the same for the audio tab, click audio, full processing mode (the default is direct stream copy, which will copy the audio stream unmodified, but this may not be good if you use something like uncompressed PCM audio), then audio, compression.
For xvid encoding parameter explanations, read
this, for divx, read
this (nothing to fear - the exe just extracts a pdf and adds a start menu shortcut).
If you need more guidance, get back to us.