There are "compression" software by which I suppose you mean video conversion software
I use Canopus Procoder 2 ( which has been superceeded) but there is a very affordable but capable Procoder Express
Main Concept also makes cpable affordable ones
Conversion takes time and is best left when you dont need o use the PC
However a lot of Video editing software have very capable 3rd party encoders as plug ins or intergral to them which means that using standalone converters may not always be nessesary
I know you already have your DV AVIs but for most people the same software used to import ( unless it is WMM) is also capable of generating other file types as part of the workflow.
This is rather less labourous than importing as DV AVI , then comverting to another format later on
I suspect you havent really explored the use of Vegas
To answer your question directly; Import your DV AVI into Vegas and "export" it to your desired format
This is the same as "converting"or compressing it
And is the end stage , after editing it ( if desired) before creating a DVD
Certainly people Import from camcorder to make web friendly video filesas well all within Vegas