I have a problem when adding subtitles with Avirecomp

I created a short video (AVI) and it's about 431 MB when I export it from Premiere Pro 5. Then, when I try to add the subtitles with Avirecomp (srt file made in subtitle workshop), the video is sized down to 80 MBs. This happens when I try to convert anyway, regardless of the subtitles. In Avirecomp I'm supposed to be able to set the size manually, and I do, but it ignores it and just makes it 80 MBs. The main problem is that the quality is much, much lower than the original video.

I have 2 questions:
1. Is there an easy way to embed subtitles into my video, other than avirecomp?

2. Is there a way to fix this problem in Avirecomp?

Thanks!