Use what ever to cut the file then in mpeg-vcr, click File and Open MPEG movie. In that window that pops up, click on the small Insert Effect button. The long green band has the curser to the left, this is the start of the movie. In the Start Effect box, move down to and select Begining Fade. Then hit OK. Click the Insert Effect button again. Slide the pointer to the far right and in Start Effect box, move doen to and select Ending Fade. Then hit OK again.
Now moving the slider/pointer on the movie window ill show that there is now fade in at the start and end. Now hit the samll Save button, give an output name and select the MPEG type (VCD, SVCD, etc). Demux this file, discard the audio part and re-mux with audio that you have created fadein/out with in your Audio Editor.