To shrink size I use Handbrake it compress the video to the smallest size without losing quality.
For Software I would recommend Sony vegas but as you say it is to slow I think you should go with either Sony Movie Studio or WMM (Windows Movie Maker) also invest in a better computer otherwise rendering or saving files will slow your computer even more.
Last but not least record voice over game play is pretty easy at first for me because I didn't have a proper headset I used "Sound Recorder" on Win7 for the sound and record the game play with the PVR ; when editing drag the sound over to match it, but what you must do is invest in a headset that will last a while and have a good mic as you want a clear voice.
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