The .MOD files are MPEG2 "underneath", but to use anything other than the provided software you need something to turn these .MOD files into ordinary mpeg2 files.
This is one free package which I've seen used successfully with .MOD files (haven't used it myself):
http://www.squared5.com/
It seems you can even do some basic editing with this package. You will still need additional software to do more advanced editing or to create a DVD, but once you have the files converted to standard mpeg2 there are many options open to you.
A cheap way forward would be the above free software plus Ulead DVD Movie Factory.
Mark