How can I make Automator ask the user for a destination directory?
Automator - 'Ask for Finder Items'

You should probably want to clean up your code. Now you are using and AppleScript and Automator and BASH.

Anyway, in Automator you can ask for a location, store that variable and use it later in your Shell script. You can 'stack' variables in an array by concatenating 'Get Value of Variable'.

Example code and screenshot:

# all input arguments
echo "${@}"

# The 'Output location' is the first in the stack
echo "Output folder location: ""$1"

# Loop through the remaining arguments
for f in "${@:2}"
do
    echo "Video file:""$f"
done