Hi there,
well, as I've been told, the Manufactorers of DVD Players, are working on it, the make the Player MPEG4 compatible. Yet those Machines aren't.
Only MPEG1 and MPEG2 is playable on a Standalone DVD Player.
So you have to convert your AVI-Files to VCD (MPEG1) or SCVD (MPEG2).
Converting Software you can download at:
http://dvd.box.sk
Hope I could give you a little kick on to the right way.