WOW, so many mis-informed steps.
Fine is Photoshop (you can resize them to 720×480 if you like, they will look wrong but that is okay.)(
Use a ProRes or uncompressed 10-Bit 720×480 sequence setting Field Dominance set to NONE (NEVER use square),
[Rene Spencer] “manipulate as necessary… “
what do you mean by this, since they are full screen you really cannot do much (just transitions between them), if you want to do scaling, pans or any moves like the Ken Burns effect they need to be oversized.
NEVER go to H264 before going to DVD. NEVER, Export above setting as self contained.
Then do yourself a favor and take the movie to Compressor and encode it to m2v, making sure you keep it progressive. Then author the disc in DVDSP instead of iDVD, but iDVD will use the m2v also if you really need to use that.