Re: 240 lines
In the broadcast world, "lines" of resolution is not the same thing as scanlines. It's giving you an indication of "horizontal" / per-scan-line / columns of picture detail. Moreover, since the Elgato device has an S-Video port on it, presumably they're expecting some users to play back SVHS cassettes. More information on resolution and VHS / SVHS can be found on this NTSC-centric Wikipedia article:
Most VHS and SVHS decks record and play back all 625 scan lines of broadcast PAL (of which roughly 576 are intended to be visible, apart from anything lost to overscan). They vary in the amount of detail captured on each of those lines, though. Nonetheless even mediocre VHS is usually good enough to reliably record and play back analogue wide screen signalling and decent SVHS can sometimes record and playback teletext - interesting if you're trying to capture page 888 subtitles.
The NTSC 640x480 resolution of the Elgato device is poor (if depressingly common for "cheap" video capture units) and makes it look rather like a kind of lazy afterthought import with PAL bolted on, throwing away real scan lines which even VHS does record. There isn't much detail to start with so throwing away entire lines of it is just silly - the less you have to start with, the more important it becomes to retain as much of it as possible. No mention of interlaced recording is made and I imagine it does its own deinterlacing job without asking.
If you want to burn a DVD from your 640x480 25 FPS new digital movie, you're going to have it scaled back up to 576 visible lines again, transcode it to MPEG 2 *and* you've lost interlace information; the net result will most likely be quite rough. If Elgato are going to keep the hardware cheap by omitting a dedicated encoder chip, the least they could've done would be to offer an "advanced" settings window which presents the standard QuickTime encoder settings, allowing the user to choose their preferred CODEC (e.g. DV, AIC or ProRes for a near-lossless master, or MPEG 2 for straight-to-DVD use).