Recording to a minidisc can sound fine; it would be perfectly acceptable to mix down to mini-disc and you'd end up with as good a product as went into it.

The problem is that what you hear in the house is never what the tape hears -- simply sticking a mic up and recording everything you are likely to end up with disappointing results. I've heard a lot of really bad live recordings, and the absolute worst are the ones where someone decided to stick a mic in the house and just record it. The loudest thing is the audience, and usually the loudest person onstage comes out the quietest on the recording. Plus delay and directional cues get wiped out in the recording process... you end up with mud.

There's a third option -- if you are seeking a relatively cheap way to get an album out, a live tracking session in a studio may be a good way. Practice your song list until you have them solid and tight, and then play "live" in a studio. You can go multi-track and mix later, or mix down straight to DAT and walk out with a finished product. You can track with one mic for each voice/instrument OR a stereo mic, OR both, and use the individual mics to fine-tune the mix.

Some vocal groups and orchestras do very well with this technique, because they are practiced at balancing themselves, and it's pretty cheap.

P.S. Wouldn't getting CDs pressed save money in the long run vs. burning them yourself?