Fraps and its stupid 4GB limit.
Ive never understood what YV12 / YUY2 / RGB meant in records to recording.
Lagarith is not the best for editing, admittedly. It's more of an archive format. Premier, Vegas etc can all read it though. VLC cannot play it properly it for example but Media Player can.
Are you sure Handbrake cannot use it? I record in YV12 and Vidcoder can open and encode it perfectly (Vidcoder is basically a nicer front end of Handbrake)
Have you tried Vidcoder?