If the Plasma TV is HD...either it or the DVD player are up-rezzing your standard def DVD...that would account for the fuzzy look. As for the blacks looking gray, that very well could occur in your MPEG2 export or more likely it's an incorrect setting on the DVD player.
For export settings, on our NLE systems, we always do a test export of about 5 seconds of color bars (that we know are accurate), then check the MPEG2 exported version on a waveform/vectorscope. We adjust the color export settings until they match (as closely as possible) the original. Then we save those export settings. You'd be amazed at how different codecs treat colors in terms of changing them. Modern codecs SHOULDN'T require this step, but some still do. We've found the MainConcept MPEG2 codec to be the most accurate of those we've used.
On the DVD player issue, every DVD player I've ever seen has a black setting in the menu where you can set it for one of three settings: passthru, lower black level, increase black level. Each DVD manufacturer will label it something different but it's basically a setting that adjusts blacks by cutting them by 7.5%, leaving them as they are, or increasing them by 7.5%.
I've never understood why this setting is needed on NTSC based players since all NTSC video should display blacks at 7.5%. Most DVD players will have the default at "pass-thru" which doesn't boost or reduce the blacks in the image. But some will set it at reduce or boost. So check that setting in the DVD player.
Thanks Chris - It's a sad thing that watching HD footage on a DVD involves downconverting and then upconverting. I'll play around more with the MPEG-2 compression settings in Compressor and see if I can get a cleaner image.
As for the effect of the DVD player itself, I won't have access to the player so best ignore that problem, but it's good to know for future reference.