You are correct. In order to backup a dvd one must first use dvdbackup and then use DVDShrink (under wine) to compress the image. When one does this one can specify for the program to turn the files into an image file (this is best as these files are HUGE). From that point you can make your backup using a burning program like K3B to burn the image.
DVDShrink (at least on my PC) does not recognize the DVD drives, nor can one make it burn to Nero, etc. Doing a direct backup from files to image doesn't work either (in that mode it can't find the file system, just has Desktop with a plus and nothing below it), so one has to use the custom option and in doing so one loses the menus. I hate menus and previews on my DVDs anyways, (after all, I bought them, why are there commercials on them?) so it doesn't bother me much.
Oh and one other thing... In order to use dvdbackup you will need libdvdcss. This library is used to decrypt the DVD key on commercial DVD's so you can view DVDs under linux. It can be found all over the net, or if you use debian like me, you can simply apt-get it.
Hope this helps.
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