I export HDV out of FCP almost daily for DVD with no issues whatsoever, so something is not right here.
I also prefer to export as self-contained, because then I have an HDV master file for future use when the format wars shake out, but that’s merely personal preference. By Reference should work equally as well
Workflow:
Render all
Export HDV timeline as current settings self-contained
Encode in Compressor.
Import into DVDSP, flagging as 16 x 9.
Works every time without fail