I suggest you watch the encoded video that comes out of compressor, in quicktime player, and compare it with the dvd image.
I have had a problem where after build, the image looked terrible (dvd sp was not re-encoding the video). I was using dvd sp 3 then. Had a copy of version 1.0 for os 9 and tried a build of this same video in a beige g3 and guess what, the video looked perfect on the same players the build from dvdsp version 3 looked horrible. I wasnt able to point what the problem was, EVEN DID A COMPLETE CLEAN SYSTEM AND APPS REINSTALL, but problem still remained.
If you can, try to build a single asset with other software, maybe even toast.
If you find a solution, please let us know
good luck
Pepo