Re: title/ action safe + trade show specs

[can I enlarge everything outside of the title/action safe area since this will be displayed on a flat screen?]
You could, but you'll create new problems either way you do it ...
If you scale everything up beyond 100%, you'll lose resolution so some of your text may become illegible, if not just ugly. If you go through and increase all the font sizes one-by-one, you'll not only spend more time/money on projects than any reasonable budget would allow, but your text will get chopped off when DVDs are played under normal circumstances, which they inevitably will be regardless of what your client thinks they know.

Unless you plan to make all of your projects twice (once to TV specs using safe title/action & once without), you'll have to get your clients to accept that video specs are what they are ... not what they want them to be.

[how do I combat the stretch that happens when you output to DVD and then put in on a large screen. Is there a special encoding trick or is this something I should be considering in FCP?]
If you're making a standard-definition DVD from a SD FCP project, which is what it sounds like you are doing, the stretch is from wrong settings on the player or TV the DVD is used with. If by "large screen" you mean wide-screen (as in 16x9 HD as opposed to just a large 4x3 SD projector screen), then there are only 3 options:
[1] set the player and TV to play SD content showing the black bars on the left and right
[2] set the player and TV to play SD content by stretching it to fit the 16x9 aspect ratio
[3] make a 16x9 DVD, which has start with your source material and continue all the way through both FCP editing & DVD authoring

The core of both of these issues is that its basically impossible to make a single video that is all things to all people and all playback devices ... a TV screen is different from a computer screen which is different from a projector screen, all 3 can be either SD (4x3) or HD (16x9), and there is simply no way to make a video that'll magically conform to all of them without some compromise (i.e., extra space, cropping, letterbox, etc.).

Sorry to offer what may seem bad news, but it sounds like your client is the one with issues, not you.