I just wanted to add a few words about Quality Control, which is very important.
The only way to get decent results is to take great care right from the shoot. The problem you are running headlong into here is one of scaling from 1920x1080 in square pixels to 720x576 in anamorphic (non-square pixels at a ratio of almost 1.4:1, making your pixels almost half as wide again as they are in height.
You are also shooting a lossy form (probably Long GOP MPEG) as you are getting MEPG-2 transport streams. SO you are starting out in a lossy form to begin with, then (if I am reading this correctly) rendering that to another interim lossy format & then finally transcoding that down to a third lossy stream of MPEG-2 for DVD. The best results will always be obtained with the minimum of messing around, so can you give this a try instead:
1 - Shoot as you normally do, import this into Premiere & edit as desired. Import the footage into the Project Browser, check it is correctly interpreted then right click it & select "new sequence from clip" so you can be sure the sequence is correctly set up.
2 - From Premiere, make an interim version at the correct PAR and resolution but using a 10-bit lossless codec, such as Quicktime Animation or Lagarith Lossless AVI - just be very careful that your resolution is set to PAL 720x576 Widescreen, and that your field order is correct for the source footage as well. (MediaInfo will tell you this - it is a free download). It is also a good idea to make absolutely certain Premiere has correctly interpreted the footage as well - go to the project browser, right click & select "Modify > Interpret footage" and make 100% certain the file settings that are there match what you see in MediaInfo. This really is important as an incorrect field order will wreck your day.
In your render dialogue, make sure you DO have "Use Maximum Render Quality" checked as this can improve the scaling. In your export module, switch between the options "Scale to Fit" and Scale to Fill" to get the best fit, but be aware that you are downscaling (otherwise known as "degrading") your source footage. This cannot be helped. If you intend to put the final output to DVD and not Blu-ray then there is little point shooting in HD and you might as well shoot in SD from the get go as at least in doing this you will skip over the degradation stage altogether. If you can shoot in SD - pick the highest quality your camera can shoot at, preferably a lossless one. This cannot be overstated enough.
3 - When you come to make your final MPEG-2, do not multiplex. This will inevitably trigger a second transcoding. Encore prefers to be fed with elementary streams, meaning an M2V and a WAV file. Do not use CBR. Use a quality 5 VBR 2-pass.
Set your minimum rate to no lower than 2.8Mbps.
Set your maximum bitrate to no more than 8Mbps
Set your Target Bitrate to 6 or 7Mbps.
Set "Use Maximum Bit Depth".
Do NOT set "Use Maximum Render Quality"
Make sure your field order is correct.
Render.
The results should be as good as you will get them unless you start spending serious money on encoders such as CCE-SP or CineVision. The MainConcept engine in Premiere is the same as the one in CineVision, it just does not have so many options for tweaking.
Make your GOP structure a multiple of the frame rate as far as possible (for NTSC use a GOP if 15, for PAL experiment & see what you get)
One other thing you can try an experiment with.
Try shooting in 24fps progressive scan (better still 23.976) and leave this frame rate throughout as well as the progressive scan setting. Modern upscaling players will handle this natively & give you a proper PS output - older ones will add pull automatically as the AME has a setting for DVD 24p (tweak as before for bitrate etc) that will still allow playback. This is a trick Hollywood have used for decades now & it works well, but you must start in progressive scan at the shoot.
Hope this helps
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