1280 X 720 DVD menu from PS

i am assembling a DVD using mostly moving backgrounds at 1280 X 720. now i have to make a few extra menus so i thought that a 1280 X 720 document ( square pixels ) in PS would come in cleanly but its squished in on the sides a bit leaving dark lines and the text ( and images to a lesser degree ) are very jaggie and look bad. i have the menus set to 16:9 and to display letterboxed on a 4:3 TV but when i simulate there is no setting that looks passable. any ideas ? i thought doing graphics and text in PS was supposed to be the higher road.