DivX Doctor doesn't do any kind of transcoding. It just dumps the data from the AVI into a mov so QuickTime can play the audio. (And this is not necessary anymore; you can just install Divx instead and open your AVIs normally.) Since QT can't encode MPEGs, that's no good on its own.
Try ffmpegX. It's all you'll ever need. But it's a pain in the butt to install.
Toast can also encode MPEGs. You might also want to try DivIllusion, although I can't personally vouch for it. Basically, any QT-compatible MPEG/VCD encoder ought to work just fine, as long as you have the proper codecs installed for QT to read your AVI (like, as I mentioned, Divx).