Um VDubmod imports Mkv containers with the Support of a AVS Script with the Direct Show Source Plugin, Um however it will skip some frames, and some frames in editing is a big thing, and sometimes audio is lost, but Since MKV is a Container for a Avi format video, Programs don't accept most Containers because Containers are not Formats, They just hold multiple audio/video streams in one file. There is MKVSplit and MKVMerge but they haven't given me the most luck, I would reccommend using MKVSplit, since it does often come back with the best results, but i don't recall what they might have renamed it, but i mean their are ways you can Edit MKV/OGM directly in for example Sony Vegas, or Premiere, any other container also but it's not recommended since frames become either lost, Your project could go corrupt sometimes, or Some Frames repeat themselves over a course of a few seconds, I can go in-depth if you want me to but this is just to some it up lol.
Best suggestion: Split the Avi Video Source from the MKV container and you should be good to go.
As far as Avi goes as well Lossless/Uncompressed is best reccommended, Codecs cause too many problems.