Just so you know, using a lossless or relatively lossless format to render these IS the way to go here so you’re not recompressing MPEG, not sure why the guy on the other forum told you to do it that way.
As for the rest, I’m not quite sure what to tell you, but I do have a couple possibilities: 1) it might have to do with interlacing. Double check and make sure you have enable progressive render of DVD menus checked in the General tab of the Prefrences dialoge. Then also go to the General tab of the properties menu with your background media selected, and make sure reduce interlace flicker is set to “on”. –actually on second thought, maybe you want this off because your video is already progressive (anyone else want to weigh in here?).
2) If both those things are in place, it could have something to do with the way DVDA resizes video. I assume you’re rendering at native 720×480 with 4:3 (.9091) Aspect Ratio. If this is the case, try rendering it with square pixels and a resolution of 655×480 so and see if that makes any difference (still use progressive and uncompressed).
If you’ve been doing all this already, and my new suggestion doesn’t change anything, then I’d say, just use the shadow option in DVDA to create the text there (set the X & Y offsets to 0 and keep the blur down tight). Hope something here works for you.
–the Fiddler