I’ve encountered the same problem recently trying to make a DVD with rather long text introduction panels.
As you say, the fonts looked fuzzy/blurred on screen.
I have made several trials under Photoshop and the best solution was to adopt PAL D1/DV square pixel (in my case, for Europe).
I suppose that for you, it must be NTSC D1 square pixel.
I used also VERDANA fonts which seem to look crisper.
I think that ENCORE is above all dedicated to video clips, slide-shows and menus written with big fonts, and not for reading small characters on screen.