Problems compressing hi-def to standard def

Just completed my first HiDef project. The blu-rays look tremendous, I used the matrox board to speed up the compression time. The client also wants a standard def dvd version. The timeline is about 2 hours long and normally (in SD) I do 90 minute (6.2 mbps) compression and use a DL DVD for the program to fit.
Apple suggested the best way to convert to standard def from hi-def would be to send the Hi Def timeline directly to compressor from FCP. It took about 25 hours to compress and the result was disappointing. Lots of overall jittery movement -almost strobe like and bad blurring during dance scenes (it was a wedding).
I then tried exporting the HiDef timeline to a Standard def QT movie and the SD Qt into the compressor. This also took a long time to convert but not as long as first method). Same poor results - actually it looked same as first flowthrough even though the output time was quicker.
So the ques. is how do I make a good quality SD version? We shot with broadcast Sony pdw-800 at 35 mb/sec which gave file size of 1440 x 1080.
I have done several tests (of shorter 5 min. durations) and can't get good quality. What confuses me is that I had made a series of 3 minute sample segments a while ago, directly from the HD timeline to compressor (exactly as did for the 2 hour program and since then in the tests) AND the quality was fine. Smooth video, and no blurriness in dance scenes.
Any ideas?
I am using Studio 3 on an imac 2.16 intel core 2 duo