Here's a 2 minute fix:
Right click or CTRL click on the application
and select "show package contents".
Then navigate to Contents > Resources > lib
Deletes these two files: libxml.2.dylib and libiconv.2.dylib
OSX Lion ships with them, and deleting them from the application bundle makes avidemux use the system version instead of the non-working version bundled version.
Tip picked up from here.