You may need to turn off the automatic scaling of the images to the project frame size. (The last item on the Preferences / General page should be unchecked.)
You might try importing your HDV project into a SD project, scale it down, and export. I found it to be more efficient. But keep in mind, you are losing pixels and the result is never going to be as nice as the original.
As far as I can tell, it is not a good idea to export to standard definition from an HD project. I recommend that you import the HDV project into a SD project, scale it down and export from there.
I edit HDV. So I chose a 10K rpm 150GB system drive, two 7200 rpm 250 GB SATA drives in a RAID0 configuration with a 250GB 7200 rpm SATA drive for a scratch disk.
Download a free copy of HDVSplit and see if that works for you. But keep in mind that Premiere Pro will not show the video in the capture window. You must look to the camera’s LCD screen for that.