If your project is a DV project, then Premiere decompresses/recompresses everything into DV for display in the Monitor Panel.
A lossless alternative to uncompressed .avi is the HuffYUV codec, and once it’s installed, you can set up a Premiere project using that codec through the Custom Desktop editing mode.
Encore will happily accept an .avi file that uses the HuffYUV codec. That way you get to use Encore’s automatic transcoding to match the bitrate to your available disc space on the DVD.
You can also export from Premiere Pro to a DVD-compliant mpeg 2 file that can be authored/burned by just about any authoring/burning application.
Bottom line: DV doesn’t have to be involved at all if you don’t want it to be.
HTH,
Jeff
The Focal Easy Guide to Adobe Encore DVD 2.0