If you do a search on this in the firums, I think you will find this been discussed several times. As far as I remember, the liteon will only work with a digital camcorder via firewire, and will not work with other sources (unless perhaps your PC can emulate a camcorder signal as you say). Other more informed users may be able to comment on this.
My camcorder allows bidirectional traffic when connected to my PC via firewire i.e. you can record from the PC to camcorder (many models in the UK only allow recording fron the camcorder to the PC - apparently this is due to some obscure EU tax reason i.e. more tax is charged if bi-directional and so manufacturers limit the spec to keep modesl more competetive). With such a camcorder, you could use thas as an intermediate step, but it doesn't realy seem worth the effort.
There are many PC packages that will help remove commercials e.g. Nero Vision Express and these will take mpeg files as the source and create DVDs, and generally do not lead to audio sync problems. A good program for editing mpeg2s is virtual-dub (mpeg2 version), but you still need a package to convert the mpegs to DVD format.