Quality loss when burning to DVD

I'm a new user to Final Cut Pro and DVD Studio Pro, and I'm having some problems with a DVD project I'm working on. If you can help me, I will be very grateful. I'm trying to burn a DVD from a project I created on FCP, and when I actually burn the DVD, the image quality is very low, although when I watch previews of the MPEG-2 I'm burning onto DVD, the image quality is fine.

Extended detail:

I created a project on Final Cut Pro. The entire timeline is 29 minutes, 9;25 seconds long. When I was done editing it together, I selected "export using compressor". In the compressor, I used the following setting: DVD Best Quality 90 minutes. This produced an AC3 Audio file (40.1 MB) and an MPEG-2 file (1.26 GB).

I then went to DVD Studio Pro. Using the graphical interface, I dragged and dropped the MPEG-2 and the AC3 file into Track 1, and hit "burn". The resulting DVD had a drastic drop in image quality. Things that had been still frames in Final Cut Pro...now, the image was bouncing/vibrating slightly on screen. Blocks of light blue color or image jagging also interrupted the image. However, this only occurred in items that had been still frames on FCP (not sure if that's relevant, but if it might be, I'm saying it). All other video...people talking normally, etc....was fine, until ten minutes into the video, when the quality of the image began to toggle back and forth...every half a second, the image would go blurry; half a second later, it would be back to normal.

I used the DVD SP "simulation" to see if the problem was in the MPEG-2. The MPEG-2 was fine. I went into my Mac's finder, double-clicked on the MPEG-2 file name, which opened the file in MPEG Streamclip 1.9.2...and in that, the MPEG-2 played fine, too.

I searched these forums and found suggestions to (a) convert from FCP file to DVD SP on Compressor, and (b) to check DVD SP's settings. I went to DVD SP's file, preferences, and went to "encoding". The settings were as follows:

Aspect Ratio: 4:3
Start: 00:00:00:00 (drop frame box unchecked)
Field Order: Auto
Mode: One Pass VBR
Bit rate: 4.0 mbps
Max bit rate: 7.0 mbps
Motion Estimation: Better

I changed the Mode to Two Pass VBR, upped the Bit Rate to 7, and the Max Bit Rate to 9.0. I also changed "Motion Estimation" to "Best. Then I hit "apply", and then burned a DVD. Unfortunately, the setting changes have not affected the DVD quality. The new disc has all the same problems as the old one.

I would experiment more, except that I've already wasted four DVDs over the course of this project, and I thought I should probably ask for help before I wasted any more. Is there an adjustment to the settings I can make to make the DVD burn at acceptable quality? Or anything that I've done wrong here?

Thank you.

-Steve

I followed your advice about the encoding. The resulting video was free of the blurring problems I was having. Thank you very much for your help.

Much obliged to you.

(as for the other problems, I fixed those by going back into Final Cut Pro and adding de-interlacing filters to all of the affected parts before re-compressing the file. So that worked out too.)