Do the tapes play/sound OK when looking at the small LCD screen on your handycam?
You might need to get the heads cleaned on your handycam.
The best way to transfer your Hi8 footage is by using a Digital8 camcorder. Digital8 camcorders play Video8, Hi-8 and Digital8 tapes. The Digital8 camcorder converts your analog tape into digital and it will also have a Firewire connection which you connect to your notebook or PC.
It might be tough to find a new Digital8 camcorder new these days, but there are heaps on eBay. Search for Digital8
Use WinDV, Windows Movie Maker or your favorite NLE to transfer the footage onto your computer. The footage will take 13GB per hour and it will be in the AVI container (DV AVI codec).
Once you've got it on your computer you can make your edits (I'd recommend masking the bottom of the frame as analog recordings have head switching noise that is usually hidden on CRTs but are visible on LCD/Plasma) using a video editor and then encode it to the DVD format (MPEG-2 for video, AC3 or PCM for audio)
If you don't want to bother with processing it on your computer, you can plug the Digital8 camcorder to a DVD recorder (using Firewire if the DVD recorder supports it - otherwise using RCA composite cables) and then burn it straight to DVD.