I tried changing field dominance and it did not change the outcome.
I also exported the sequence using both dv/dvcpro-NTSC and H264 ad got the same result. The clips look OK in the timeline but once exported, even on my computer screen, I can see lines everywhere. I would begin to wonder if it was looking OK inside FC because its not full resolution on the canvas, and the lines show up because of more detail in the final product except for the fact that the original DVD material looks great.
I thought of analog capture of the DVD thru my camcorder but for some reason the aspect ratio gets distorted so I can’t try that. I think I am going to try going back to the original 8mm film and having it converted to DV directly – I am having it sent FedEx to me.
Meantime, here is a particularly ugly example of what I am talking about – its a fast motion frame showing a wingtip tank coming into shot as a small tower in the Colorado river goes by below – you can see all the lines. In the original, there is just a grainy film look and blurred motion.

…..Gary