You can do anything you want, you can even burn 6 hours on a dvdr.
The 120minute is just an average suggestion at reasonable quality. Theres a reason superbit dvRAB use 7~GB for just the film to retain quality. You can always do with less, it just sacrifices quality is all.
Avi implies piracy, so really, stop wasting your time. Its far below dvd quality in the first place. A generation of compression loss, over compression due to piracy "rules" of cd-r size, and resolution sacrifice. You might as well just watch the gimped video on your pc and save the disc.