[Alicia Beeson] "I started a new project to test the imported 704 size by transcoding it to 720 size with just one of my movies and it worked! but then of course I decided to re-build the entire project and it didn't work again."
That one of your files worked (like it should have from the beginning) but not all of them did, indicates that something is wonky with one of your assets.
If you use footage from this camera in the future, and you edit or composite it in AE, the direct-to-mpeg2-in-AE workflow should save you time overall.
If the footage is stretched coming out of AE, then your comp PAR is wrong. If you are setting up a widescreen comp with a PAR of 1.2 and the camera's footage isn't true 16:9, then the output from AE will appear stretched.
Try rendering a comp in AE that has a PAR of 0.9 and see if the footage looks normal.
-Jeff
The Focal Easy Guide to Adobe Encore DVD 2.0