Rather than letting your DVD creation software re-encode what Sorenson has already compressed, I would recommend letting the DVD software just do the compression once, assuming it understands the codec you are exporting from Avid. Also, while you can put HD content on an SD DVD it will still take a Blu-ray player to play it back and it would have to be a pretty short file, so I am assuming you are downconverting HD content to SD, which is obviously not going to look as good. If you are capable of writing to Blu-ray disc I would recommend that, especially if the client can view it on Blu-ray, which would solve your other issue.
I am having the same issues with delivering HD content to clients for them to view. It seems like the best bet for a tiny file that still has great looking HD footage is H264, but the issue I have run into is that my clients don’t have software and/or hardware capable of playing back H264 smoothly. Sorenson will compress some great looking tiny H264 files though if you haven’t tried that yet.
jeff g