Avosmac2ISO verison 0.1 is not a very high-quality app. If the name of the folder you want to convert doesn't contain any spaces or special characters (e.g. $, &, etc.), then this will probably work... and then it will annoyingly open the company's Web site after it creates the ISO. If the folder name contains any spaces or special characters, the program fails. This bug is probably caused by a simple lack of quotation marks around the input string within the AppleScript code.
Even though Avosmac2ISO is a simple AppleScript application, the author chose not to include the source code, which makes it more difficult for people to help the author find and fix bugs or to modify it to create a solution that works better or has greater functionality.
One good thing about Avosmac2ISO is that its error messages are descriptive enough for you to figure out that the program is just using (or, rather, attempting to use) the hdiutil command-line tool. For more info on what you can do with hdiutil in regard to ISO images, try a Google search for hdiutil iso. You might need to just use the Terminal instead of this app if it doesn't suit your needs. The Terminal command has a lot more functionality, although it lacks the drag-and-drop simplicity that Avosmac2ISO tries to achieve. Hopefully a future version will be released after the author does more careful testing and code cleanup.