KeyFrames and VirtualDub

[Brain]

I'm new at using VirtualDub but I have found it to be a great tool.

Anyways in reading about Virtualdub I came across you can only cut on a keyframe and have proper play back

I have found that to not be true in doing several Divx files. I edit out commericals and cut where ever looks and sounds the best place to cut, and the videos plays back great. I have also joined these files like this too. (since ATI TV cant Capture more then 99:99 Minutes GRRR!)
I captured in Mpeg-1 then converted them to Divx 4.11(i've also used 4.01) using Flask Xmpeg 4.1c. Then edit them in VirtualDub 1.4.7
And Recompress them in Virtual Dub.
(I've noticed when I do recompress them there is slight quality loss but not really noticable at all since it's captured from TV. I also notice file size shrinks abit too)

Any thoughts