As mentioned before virtualdub is not much of an editor so you will likely not find people using it over something with a more clip or timeline focused approach. Even without that it is tied to some older technologies (VFW for instance and has iffy support for newer formats and containers) which make it harder to work with, by no means impossible but still not ideal. The avisynth scripts you mention are actually a standalone video editor, my favourite one as a matter of fact, though they are reasonably well integrated and virtualdub filters can be called in avisynth (ish, some of the complex GUI stuff some filters sport is harder to do). You can slice things out, resize and append new footage but what would take 3 minutes in a timeline based editor , never mind if you then decide you want to change it and have a different amount of footage before a cut and certainly not a 900 shot video production.
I don't know why you would use virtualdub's screen capture over either the emulator's own record features or a more fully realised screen capture program (many are free). If you have a video capture card in your machine then it is a fantastic tool and well worth having/using; I actually use it as my primary means of interaction with such cards, even when playing/watching for fun.