Hey! Not sure if you’re still having trouble. I fought tooth and nail with the FCP suite for weeks. After 50 DVDs with VERY low quality results, and several goose chases (including stumping the one-to-one FCP guy at the Apple Store), someone gave me the answer.
Basically step one is you need to convert the sequence to 720p30 before you start compressing and burning it. (right click on the sequence>Settings and change the Pixel Aspect Ratio to HDV 720p30). While you’re in there, change the Quicktime Video Compressor settings to match. You will have to re-render the entire sequence (it may look a little squished, but that’s ok). I also checked the Anamorphic 16:9 box because I had already completed the production of the sequence and couldn’t afford to have anything cut off.
Then export that using File>Export>Quicktime Movie with Current Settings. Afterwards, take that file into Compressor and compress it using the Apple>DVD>DVD: Best Quality DVD 90 min (using a VBR somewhere like 6.0 – 7.7). That will give you the m2v file that you can then import as an asset into DVDSP. It worked like a charm for me! I can’t tell you how many hundreds of files I tried before finding this solution. The process I followed is listed out here with all the screenshots: https://www.kenstone.net/fcp_homepage/hdv_to_sd_dvd.html
Here is a screenshot of my sequence settings:
