doing multiple-pass encoding often allows you to use a lower bit-rate, 'cause you're giving the encoder extra time to analyze the source video & decide which frames need more bits & which frames need less.

use a video noise-reduction filter to eliminate the grain/static that's prolly present in the source. the result will be a little blurry, but it will also reduce macro-blocking (when the codec is overwhelmed by motion & grain and just breaks up into a mosaic pattern) which is arguably much worse than a lil bit of blur. this will also allow you to encode at a lower bit-rate, 'cause you're eliminating some of the visual detail. but if you're creating clips for people to look at on a website, fine detail is prolly not your first priority anyway-- the first priority is size, so that you don't tap out all of your bandwidth.

play around with the resolution and framerate. film is projected in u.s. theaters at 24 frames per second, and u.s. television displays 30 frames per second... but for a video clip on a website? you can prolly get away with as few as 15 or 20 frames per second.

um, i haven't used Dr. DivX a whole lot, but for such purposes i wouldn't recommend it. it's not flexible enough, doesn't give you nearly enough control & fine-tuning. VirtualDub gives you a much better grip on every option & detail of AVI-encoding, and it'll do a better job of preserving image quality at extremely low bit-rates (such as those you'd wanna use for distributing clips through a webpage).