M2V is an elementary MPEG-2 video stream - what you get when you de-multiplex the video out of the VOB files. Ideally you want to get this into your editor without having to put it through a lossy encoder.
The Mainconcept plug-in allows you load in the M2V directly. The AviSynth/DGDecode approach tricks Premiere into thinking that the file is an AVI. If you are going to save the video into an AVI, don't use DivX, use a lossless codec like Huffyuv or Lagarith. Using VirtualDubMod or VirtualDub-MPEG2 for the conversion would be better than using Super, IMO.
BTW I've never actually used Premiere (Elements) myself, so any advice from those who have would be welcome.