An ISO file is an archive of one or more files represented by a single image file.
If you want an exact copy of a group of files to reproduce for future use, ISO is the way to go. For instance, if you want to burn an exact copy of a DVD of a software program or a movie you could turn the contents of a whole disc into an ISO file and then later use a disc burning program which supports ISO to create a replica of the DVD.
Since we have seen how data or video files could be turned into a single ISO file, now let’s look at how an ISO file could be converted into an MPEG file.
First of all, you need to bear in mind that when a file or group of files are converted into an ISO file, no video conversion takes place. The ISO just makes an image of the original files.
In our case here, if the original file is not in MPEG, then the ISO will not make any mirror of an MPEG file.
If your original file is in AVI and you create an ISO image file of it, you’ll end up with an AVI file when you extract the ISO file. That doesn’t mean it's impossible to end up with an MPEG file after extracting an ISO file.