VideoReDo and Womble Mpeg Video Wizard DVD are two commercial programs that are designed to work with the mpeg2 video streams found in dvd video. There are free trials for both.
DVDShrink is free to use, and as cholla pointed out, you can use it in ReAuthor mode and select sections that you want to cut out with the Start/End Frames tool. The output from Shrink will be small dvd video files.
I don’t really advise AviDemux for cutting mpeg2, as I have had too many issues with it losing audio/video synchronization.