Prepare AC3 Audio
Using AC3 audio is the most high quality way of doing audio. You do not lose any quality over the DVD audio and even have multi-speaker surround sound if available.
However, since their bitrate ranges from 192kbps to 448kbps, it could be quite big. Most common bitrate on anime DVDs is 384kbps and that seems to be the standard used by most major anime publishers. Some small timers and older releases use 192kbps which is nice bitrate for use in this purpose. But with so much space available on DVD, why use 192kbps?
It's very easy to use AC3 in AVI. Grab AC3 pack from doom9.net. (or you can also get my MS MPEG4 pack which includes the AC3 DirectShow decoder and get VirtualDub-AC3 from download) Using VirtualDub-AC3
or Nandub, we can create a AC3 WAV file that normal VirtualDub can use similar to an MP3 file with RIFF header. Difference is that VirtualDub will not be able to decode or play it back, since it has no support for DirectShow. But it'll read and do Direct Stream Copy just fine.
Install the DirectShow AC3 decoder, and install VirtualDub-AC3 or Nandub.
Using the VirtualDub-AC3 or Nandub, load the AC3 file by doing Audio->Wav audio
or Audio->AC3 Audio and selecting the AC3 file.
Do File -> Save Wav. (you'll need to have a video loaded to enable this menu item) You'll now have WAV file coded with AC3 which can be loaded into normal VirtualDub for direct stream copy. You can delete the original AC3 file now if desired.
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