How can I change/reduce the bitrate of AVI files using Adobe Premiere Pro CC or other tools?
Premier Pro doesn't encode XViD, you'll need to rely on another solution such as FFmpeg.  Using FFmpeg is a different question but the command will be something similar to:

ffmpeg.exe -y -i "in.xvid" -t 480.00 -vf scale=720:301,pad=720:576:0:137 -map 0:v:0 -map 0:1 -b:v 2500K -vcodec libxvid -aspect 1.25 -b:a:0 128K -ac:a:0 2 -ar:a:0 48000 -codec:a:0 libmp3lame "out.avi"


you'll need to tinker with these settings to get the exact quality you want