)IIRC, VOBrator can separate the video and audio tracks quite well, but it's kinda technical. I've not used a wide range of programs - I find something that works and generally stick with that. If you have DVD-Lab, you can drop the VOB into that and it will separate the streams as well and quite easily. After that, Besweet will split the AC3 into 5 WAVs (I could never get it to make the .1 channel. Maybe that's changed since then.) After that, I edit in Vegas, and recombine them into a new AC3 file.
Vegas can edit MPEGs, but it's kinda slow. Better to render out to an AVI. If you're just cutting segments out, you can use Womble (ADigitalMan is the expert on that program. I've not used it at all.) Doom9 should have better directions than I can give.