If you prepare video footage in a program like After Effects and apply a levels adjustment to go from 0-255 to 16-235, do you have to then compensate when using an mpeg encoder such as Cinema Craft Encoder? Encoders are usually automatically set to 16-235 range when using a preset for NTSC DVD. Would this erroneously further narrow the level range if you had already prepared the master footage within those specs?
if you use CCE or ProCoder you NEED to set 16..235 because any composition/editing software makes it better - no need use CCEs or CPC2 16..235 or ShinkColorSpace...
If you use mainConcept encoder (Adobe Premiere, etc) - then you not need to set levels because encoder automatically set it.
I'm not 100% sure how to interpret the first sentence of your answer. I believe you are advising that it is better to shrink the colorspace and limit the levels in the master footage creation rather then during the encoding. Keep it 1-255 in the encoder if the master footage is already 16-235.