Encore requires all assets be full-frame DV video (720x480/576 NTSC/PAL). The DVD-Video spec itself requires that video be either full frame DV video (as required by Encore) or a couple of other MPEG variations (half-D1 for MPEG-2- 360x480, and one or two MPEG-1 frame sizes that I can't recall off the top of my head- 720x240 or 360x240?...guessing). Any other video frame size would need to be scaled to fit one of those resolutions.
The reason you don't see support for other supported DVD-Video sizes or for video scaling options in Encore is that there haven't been many feature requests asking for it. Make sure to file a feature request at Adobe's website if this is important to you.