Since its 87min long, you should be able to convert to SVCD and it will fit to 2 CD's. Use pic size of 352x480 and TMPGEnc default data rate.
If you convert to std VCD, then using TMPGEnc, tick Soften Block Noise and try with default settings of 35/35 or increase to 50 or 60. Then the pic will not be grainy.


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