Hmmm.......... it's been a while since I used this trick, and when I tried it just now I got the same crashing, so my guess is is that Apple updated something that made this not work.
Never fear, there's always Handbrake!
Go get Handbrake here.
You want the "GUI" version for the Mac you have (PPC or Intel). Handbrake is a wonder app that all Mac users should have, so it's just as well that you're getting it now.
It looks a little complicated, but it's not. Make sure your DVD is in your machine and fire Handbrake up. Select the video files from the DVD as your source and MP4 as your output. You can play around with the video and quality settings, if you like.
Once Handbrake has converted your file, open iMovie and drag the MP4 file into the event library. The "import movie" doesn't work, for some reason, but dragging does.
Now you're in business-- just edit out what you don't want and export via the "Share" menu in iMovie.