a) if only text use a dvd autoring soft and do it with subtitels (no reencoding)
No, it's really an image, a bitmap.
avisynth or virtualbub ? I have to try that see what it looks like. But premiere, I can't.b) decode pictue by picture and - do you manipulation - reencode this can be done with any good programm for video effect (ie adobe premiere) or as freeware use avisynth or virtualbub with its effect-plugins