Try this and let me know if its any better. I am also continuing to look for the best workflow.
I have had good luck with the following HDV to DVD workflow. Export the HDV via QT Conversion using the H.264 codec. Set the resize here to 720×480 and use the best quality. Then bring this QT into Compressor 2 with GOP set to IP. Just drag into Compressor 2, don’t go back to FCP. I used 60 minute high quality encode widescreen. Make sure to resize in QT rather than Compressor, you will get better quality and a much shorter compression time. My HDV piece had many freeze frames and slow motion. This procedure was much smoother and sharper than others I tried that needed to be deinterlaced to get rid of artifacts.