Can blender turn an .mpg file into an image sequence?

or if you know another program (like Cinelerra) can do this.

Yes, no problem. Just import the clip into the Video Sequence Editor, set correct range/ resolution / image format / file path, and render it out.

You can also do it with compositing nodes, but unless you want to do fancy stuff with the footage I think the VSE is the way to go.