Charles,
I'm not sure why your conversion house would put it on one AVI file. When I've done this I supplied an external hard drive and requested "uncompressed" AVI files. You get about 15GB/hr for 4Mb/sec 720x480 footage. A 200 foot, 16mm film reel is 8 minutes worth. I'd think what you would get is 10, ~8min AVI files. Be sure to ask for the “uncompressed” files so you retain the highest quality and can do what you want with it latter. Many houses produce to DVD-R as default and can put about 3200 foot of 16mm film on a single DL DVD
I've successfully brought in a ~50GB file and then split into several files in PD7 and then produced each section to the specification I wanted. So, if you do get one “uncompressed” AVI file for a full 80 minutes (10, 200ft, 8min reels) of film it would be about ~20GB and you should be able to bring into PD7 and split at whatever time slice you want and then produce to an output file.
Jeff