Quality of VHS converted to DVD
One big loss in converting VHS to DVD arises from going through the composite domain. Both VHS and MPEG2 use a separated chroma paradigm -- on the VHS tape are two signals, essentially luma and bandwidth-limited chroma. MPEG2 (the standard for DVD) also uses separate luma and chroma. But the standard output from a VHS player combines the signals in a way that means the MPEG2 encoder must do a rather imperfect job of unmixing them again.

One solution, such as it is, would be to use a VHS player that has separate luma and chroma outputs, called S-Video, and an encoder that can work directly with S-Video components.

I'm not saying you'll get beautiful results, because nothing about VHS is beautiful to begin with. But you would be sure of getting a conversion that doesn't suffer unnecessary losses.